Encroachments & the Mystery of Capital: A Pakistani Context

This working paper attempts to examine the economic nature of encroachments in developing countries by considering the context of Pakistan. In the tradition of De Soto (2000), the question of encroachments is framed in terms of the “mystery of capital,” in that developing economies such as Pakistan are characterized by an absence of enforceable legal property ownership and title to concrete/material assets as a source of revenue generation. Instituional and legal considerations are presented, along with an emphasis on Islamabad (capital) as a pertinent case. Given the dearth of data, the theoretical approach posited by De Soto enriches the discussion about the nature and the consequences of ad-hoc, informal encroachment on developing countries including Pakistan.