Financial Development, Economic Growth, And Poverty Reduction (The Mahbub Ul Haq Memorial Lecture) (Report‪)‬

INTRODUCTION There is a longstanding tradition in economics with the issue of financial development and economic growth. Goldsmith (1969) stressed the connection between a country's financial superstructure and its real infrastructure, arguing that the former 'accelerates economic growth and improves economic performance to the extent that it facilitates the migration of funds to the best user i.e. to the place in the economic system where the funds will yield the highest social return' (p. 400). In one of the earliest studies to use cross country empirical analysis, Goldsmith presented data showing a positive trend in the ratio of financial institutions' assets to gross national product for developed and developing countries.