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In the present age of globalisation, development is a theme that usually encapsulates totality of a country’s outlook. The ever-increasing global concerns like poverty and unemployment are highlighting the downsides of development, theory highlighting needs for foreign aid. In the current era of post-recession and rapid socio-economic developments, both developing and developed countries are undergoing policy changes. The promotion of FDIs, foreign policies and trade sectors are all influenced by the growth of foreign aids received from international collaboration and exchanges. Different types of economic programs and policies are being conducted by national governments with the help of multilateral aid agencies and foreign donors. National governments are required to develop and implement suitable policies for ensuring that foreign aids are directed and used towards a more productive sector.The present essay seeks to analyze the role of foreign aid interventions in policy development and its success. The essay discusses three theories, namely Big Push theory, Financial Liberalization theory and Agency theory in the content of national government’s policy development. The essay also puts forward empirical evidence based on the theory results for identifying impact of these theories on foreign policies of a government. A concluding section is provided that includes summary of the important points.
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