Does the state disable small business? A critique of Hernando de Soto

Mushangai, Dandira
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The research dealt with the crisis of development and the crisis in development theory with reference to small scale business development in the context of South Africa, Soweto, Jabavu. The focus was on the emergence of Hernando de Soto within the development fraternity and the implication of his propositions with regard to legal institutions and the formalisation of the small businesses on the development of the Third World countries and their transition to sustainable capitalism. The qualitative methodology was employed for its versatility and flexibility in interrogating the various factors in relation to small business development and the development of South Africa in general. The study argues that, the critics of development have failed to comprehend the central maxims of the De Sototian development approach, hence have applied it to dissimilar contexts and circumstances which smacks of hypocrisy and uncritical academic scholarship serving no purpose but to cloud our understanding of development. This has had the confusion of the development processes as its resultant effect. The study arrived at the conclusion that, if placed within its contextual limits, the De Sototian approach has tremendous capacity to stimulate SMEs development in particular and development in general, hence facilitating transition of the Third World countries to sustainable capitalism.
Submitted to the Faculty of Humanities in partial fulfilment of the Master of Arts degree in Development Studies at the University of the Witwatersrand, Johannesburg. Date: 24 February 2015 2015