Posted: May 24th, 2016

Explain how “Dead Capital” is related to the informal economy? Define these terms and explain what they mean in the context of DeSoto’s ‘dead capital’.

Explain how “Dead Capital” is related to the informal economy? Define these terms and explain what they mean in the context of DeSoto’s ‘dead capital’.  2. Many of the owners of houses in ‘shanti towns’ in the outskirts of Peru’s capital Lima, are happy that they do not have to pay land taxes, or municipal rates, as we do in Australia.  Is this an advantageous situation to be in for the poor in Peru? Explain your answer. 3. “… Possessions … are not represented in such a way as to make them fungible (easily exchangeable) assets” … and … “the informal economy is so large in Peru that almost 70 percent of the working population work in informal arrangements”.  How would this impact on the measurement of Peru’s GDP? Explain your answers in terms of the components of GDP, i.e. GDP = C+I+G+NX.  Which components would be most affected?  How would this affect transfer payments?  4. Would the informal economy hinder or promote economic growth in Peru?  Explain your answer. Hint: look at “New Growth Theory” and the case study on Botswana on p. 380-381 to answer this question.