Chapter 1 unpacks the traditional framework that shapes how scholars and policymakers think of corporate governance and its role in financial development and market growth. It reviews the main strands of literature that have nourished legal scholarship in the field of economic development law and development studies and the new institutional economics tradition. It describes how these strands connect with the main theories underlying scholarship on corporate governance and financial market development and explains that the literature highlight the importance of investor protection for the growth and development of markets.

In the framework of a critical illustration of the contemporary history of economics, this chapter illustrates the development of the neoclassical synthesis, from Hicks to Modigliani; its appropriation of the Phillips curve, some Marshallian varieties of the neoclassical synthesis, the developments of growth theory since Solow’s model, stressing the theoretical limits of these developments. A brief appendix synthetically provides an algebraic representation of these developments, while stressing their limits. A final section surveys the variegated field of development analysis.