How and how far foreign aid has affected Pakistan??'s industrial performance is the fundamental question of this study. It examines the history of aid flows to Pakistan; their interaction with economic growth and planning in the country; the role of foreign aid in the balance of payments and external indebtedness; and the reciprocal links between aid on the one hand and income, employment, investment and the structure of Pakistani industry on the other. The assistance programmes of selected donor countries and institutions are emphasized, with a view to explaining the aid-giving process and tracing its effects on various segments of Pakistan??'s industrial activity. The authors conclude that the flows of aid have been particularly significant during the second five-year plan. They also reach conclusions about the impact of the flows on Pakistan and the implications of this experience for aid policies in general.