Bangladesh is largely dependent on foreign aid for its development activities. The country has received some US$50 billion in aid over 40 years of its existence. The central purpose of this thesis is to study how the massive influx of aid has been put to use. Subsequently, this huge amount of aid has had little impact on the country’s socioeconomic development, and little of the benefits of aid have reached the poor who constitute the vast majority of the population. The main aim of this thesis is to determine why this is so. An objective will be to derive an understanding of the aid philosophy of donors and their contributions towards the formulation of the development policy in Bangladesh. The analysis should help shed some light on the development agenda of donors as well as recipients, and should be especially useful to academics, development professionals, statesmen, students of economics and development studies, or anyone else who may be interested in foreign aid and its impact on a country of the developing world.