A Peruvian economist and entrepreneur reinterprets the development struggle of the Third World--and envisions a free-enterprise route to social justice in opposition to the route taken by Peru's Maoist guerrilla movement, ""Shining Path."" De Soto's main thesis is that government attempts (whether by the right or the left) to develop economies have led to so much bureaucracy and red tape that--in Lima, Peru, for instance--the illegal black market has become the most productive sector. ""Informals"" operating outside or on the fringes of the law--and in spite of minimal education and lack of access to capital and legal guarantees--dominate the provision of public transportation and housing, and are significant in other economic areas. De Soto rejects the conventional View of Latin American economies as ""feudal""; instead, he classifies them as ""mercantilist,"" with a legacy of redistributing (rather than creating) wealth. His empirical research refutes racist notions: rural and Indian migrants to Lima quickly adjust to urban life and display entrepreneurial skills and ambitions; their failure to be integrated into the official economy is due not to their culture but to laws that, while seemingly neutral, exclude newcomers. Essential reading for Third World developers--as well as to those concerned with homelessness and the economic devastation of minority communities in the US. With its favorable reports on poor people ""invading"" and claiming unused or underused land for housing, along with its calls for deregulation, De Soto's work will provide stimulation and intellectual ammunition to Americans on both ends of the political spectrum.