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Land Titling and Microcredit in Cambodia: Examining the Reality of Hernando de Soto’s ‘Three Steps to Heaven’

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  • Milford Bateman

    (Research Group on Financialization and Development (FINDE), Federal Fluminense University (UFF), Rio de Janeiro 24020-091, Brazil
    Global Development Studies, St Mary’s University, Halifax, NS B3H 3C3, Canada)

Abstract

Starting with the work of Hernando de Soto in the 1980s, the role of land tenure soon attracted the attention of the international development community as a neoliberal-oriented theory of change rooted in the possession and use of private individual land titles by the poor. One of the central mechanisms proposed by de Soto was a three-step process that involves the poor (1) “securing” their tenure with land titles, (2) using their newly acquired land titles as collateral to leverage large amounts of microcredit to be used to establish a functioning microenterprise, and then (3) escaping from their poverty due to the jobs and income associated with founding and running a microenterprise. This paper explores what I call de Soto’s “three steps to heaven” theory of change, a concept that was taken on board with gusto by leading Western governments and virtually all of the main international development institutions, particularly the World Bank. I argue that Cambodia provides the ideal setting for evaluating de Soto’s concept because, since around 2020, it has possessed the largest microcredit sector in the world (on a per capita basis), thanks largely to the obligatory use of land titles as the collateral required to obtain microcredit. While the first two of de Soto’s “three steps to heaven” have been realized, the evidence shows that the assumptions related to step three have proved to be extremely problematic: the ubiquity of microcredit that was achieved since the early 2010s via steps one and two has not, in general, improved the lives and communities of Cambodia’s poor through accelerated microenterprise development. It appears, instead, to have contributed to deeper poverty, insecurity, vulnerability and inequality. I conclude that de Soto’s “three steps to heaven” theory reflects a fundamental misunderstanding of the real institutional drivers of sustainable local economic development and poverty reduction.

Suggested Citation

  • Milford Bateman, 2024. "Land Titling and Microcredit in Cambodia: Examining the Reality of Hernando de Soto’s ‘Three Steps to Heaven’," Land, MDPI, vol. 13(4), pages 1-31, April.
  • Handle: RePEc:gam:jlands:v:13:y:2024:i:4:p:502-:d:1374571
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    References listed on IDEAS

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