Extralegality, also called informality, describes businesses and property that are not licensed or registered legally. In the developed world few businesses and almost no property is held extralegally.

Extralegal businesses in the developed world might include small day care operations out of a person's house, gypsy cabs, or street peddlers. In country after country across the developing world, on the other hand, de Soto's researchers have documented that the vast majority of businesses and properties are held extralegally.


Hogra is not a term known widely in the West, but it ought to be. Over the last several years, Hernando de Soto's researchers at the Institute for Liberty & Democracy (ILD) interviewed 35 survivors of self-immolation in the Maghreb. All named hogra as the number one reason for their attempted suicides.

Put most simply, hogra refers to vicious and humiliating discrimination by officials, the police, and bureaucracy. It often involves violence. Its victims are the dispossessed majority in Arab dictatorships where civil society was brutally suppressed and there is no form of redress for wrongs endured.


As Kuran points out, Islamic business law had originally been developed by judicial experts, merchants, and businessmen to effectively carry out the dominant form of trade at the time, the caravan. The solution they came up with, part of what we now know as Sharia, was an impressive body of business law by the standards of the Middle Ages. It gave the Islamic world a large competitive advantage, making it easy for two or more merchants to join together, fund a caravan, send it across the world buying and selling, and split the profits when it returned. The partnership was then ended.


In some ways, corruption in the Middle East and North Africa (MENA) is the same as everywhere else. Bribes are offered and taken. Family members, regardless of capabilities, get plum jobs or feather their own nest in easy ones. Corruption in this region is unique in many ways, and exists on a grand scale. It presents difficult challenges for reformers.

Former newspaper reporter Brian Whitaker, in his book, What's Really Wrong with the Middle East, quotes a UN study that reveals that Arab corruption exists in a league of its own.


Cronyism, corruption, and bad business law aren't just found in the Middle East and North Africa. You can find them everywhere, including in one of the world's richest cities, Chicago. Keeping governments free from takeover by insiders and elites requires constant vigilance.

© 2018 Free To Choose Network. All Rights Reserved.