BY TIM JOHNSON

 WASHINGTON -- Among those considered finalists for the Nobel Prize in Economics today is Hernando de Soto, a Peruvian investigator who travels the globe seeking answers to why capitalism has failed to alleviate poverty in the Third World.

 Championed by some as a dazzling thinker, and denigrated by others as not scholarly enough, de Soto is in the running to become the first Latin American in nearly a
 decade to win a Nobel Prize.

 His fans include Ronald Reagan and President Vladimir Putin of Russia.

 "He's someone I'd fly across the country to have dinner with,'' said Paul Saffo, a futurologist in Menlo Park, Calif.

 De Soto believes that the world's poor own $9.3 trillion in property but cannot unlock the potential of this ``dead wealth'' without formal titles and property law systems that endow income-generating potential to assets.

 ``If you integrate the poor into the game, they can create wealth,'' de Soto said in a telephone interview from Lima, Peru, where his Institute of Liberty and Democracy is based. ``It's like tennis. If you know the rules, you play ball.''

 In much of the Third World, and the post-communist Eastern Bloc, huge quantities of land are held by the poor without legal title, and numerous small businesses have no legal standing, making them worthless for loans or in trade, he said.

 ``When your legal system doesn't work, you can't capture value,'' he said.

 De Soto first came into the world spotlight when President Reagan called him a hero in a speech to the U.N. General Assembly in the late 1980s. Time Magazine cited him in 1999 as one of five Latin innovative thinkers in a Leaders of the New Millennium issue.

 Most candidates for a Nobel economics prize, which is awarded by Sweden, are academics who test theories with rigorous analysis. De Soto does not fit the mold.

 ``He's an ideas person,'' said Carol Graham, an economist with the Brookings Institution, a think tank in Washington. ``He's not in the mainstream of the economics
 profession at all. There would be plenty of people who'd be unhappy [if De Soto won]. I don't include myself in that group.''

 The Reuters news agency, in a cable from Stockholm, cited de Soto as a ``strong candidate'' for the economics prize, and said his work on ``informal property ownership and obstacles to small-scale enterprise has struck a strong chord in aid-conscious Sweden.''

 The last Latin American to win a Nobel was in 1992, when Guatemalan indigenous activist Rigoberta Menchú captured the Peace Prize. The Peace Prize also went to two Argentines -- Carlos Saavedra Lamas in 1936 and Adolfo Pérez Esquivel in 1980 -- and to Costa Rican President Oscar Arias in 1987.

 Five Latins have won Nobel Prizes for Literature: Gabriela Mistral of Chile (1945), Miguel Angel Asturias of Guatemala (1967), Pablo Neruda of Chile (1971), Gabriel García Márquez of Colombia (1982) and Octavio Paz of Mexico (1990).

 Two Argentines have won in science, Bernardo Houssay for medicine in 1947 and Luis Leloir for chemistry in 1970. A Mexican chemist, Mario Molina, won in 1995.

 De Soto, who was educated in Switzerland, briefly flirted with the idea of running for president of Peru last year. Polls showed him as a contender. Supporters gathered 200,000 signatures to formalize his candidacy, falling slightly short of the required number.

 "Everybody sighed relief,'' de Soto said, reflecting his ambiguity about politics.

 De Soto's first book, The Other Path, was published in 10 languages. His second book, published last year -- The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else -- is in 20 languages, he said, and captured the attention of Russia's Putin last summer.

 "His advisors told him he should talk to us,'' de Soto said. ``We had a three-hour meeting alone. I'm going back to Russia in November.''

                                    © 2001