This paper presents a literature review of issues related to recent subsidies and investments in the financial sector that have been designed to address the immediate effects of the crises and to develop the financial institutions necessary to modernize agriculture. The literature consulted reflects a combination of academic sources and reports from the agencies and organizations involved in supplying financial services in developing countries. Against this background, this paper presents a review of subsidies as an instrument of agricultural development finance. This review is one of the major recent initiatives of the CABFIN partnership. This review also clearly defines the different types of subsidies currently used in agricultural development and proposes “smart”—that is, appropriate—use of subsidies to support viable agricultural development.