Fukuyama on state-building and De Soto.

Now that state-building has become an official "practice" for those in the field of foreign policy studies, it makes sense for Frank Fukuyama to share a few of his "lessons learned" with state-builders-in-the-making. This is a truly fascinating interview in which Fukuyama discusses all things foreign policy. When asked about the role played by Hernando De Soto in the current aplomb for new institutionalism, Fukuyama remarks:

I think that Hernando de Soto is probably the single person that is responsible for this focus on governance in developing countries, because his book, “The Other Path,” was really about weak governance in places like his own home country of Peru. He has this famous example of trying to get a small business license and it took something like nine months and $1,400 in bribes and so forth in order to simply open a business. Th is example does not simply illustrate too extensive government, because any government has to register small businesses, but it shows well how ineffective a government can be. So he set the agenda that you need strong institutions and you need a rule of law. He emphasizes the informal sector a great deal, but a lot of the reason that you have an informal sector in poor countries is that the formal sector is so bad. In fact, in his first book, he’s got a whole section on why it is better to live under rule of law rather than have to live by all of these informal laws. He also talks about how much you lose by not having regular, transparent, and understandable rules by which people can interact with each other.