Introduction

This edited book provides a critical overview of recent developments in the area of development finance. Some important common themes have emerged. For instance, the assessment of the literature on the impact of financial frictions upon misallocation that shows that the size of firms is an important determinant of the dispersion in total factors productivities between developed and developing countries can be linked to the recent criticism that microcredit, by being targeted to micro-firms, is unable to generate sustainable firms’ and employment growth and lift people out of poverty, possibly requiring an intervention from the state to help firms grow. Also the relevant chapters in the book show that, although stock markets have a role in affecting growth at macro level, the empirical evidence of a positive impact of stock markets is significantly more mixed at more micro level. Finally, the role of remittances and foreign direct investment (FDI) in enhancing economic development is also critically analysed.