State Formation and International Aid: The Emergence of the Palestinian Authority

Hillel Frisch, Menachem Hofnung

Research output: Contribution to journalArticlepeer-review

19 Scopus citations


Thirty years ago, Samuel Huntington criticized Western aid policy toward new states that assumed that economic improvement in the standard of living coupled with democratic institutions would yield a more stable and democratic state-building process. An extensive political economic literature on the developmental state has since emerged that explores the complex relationship between state capacity, economic development and democracy, much of it critical of both the economist assumption, and the importance of democracy in achieving sustainable growth, at least in the initial stages of statehood. This literature, however, does not specifically relate to the impact of international aid affects state consolidation despite its critical role in the initial stages of new states. The paper explores how international aid affects on new state formation in the 1990s as reflected by the Palestinian experience, and more specifically whether Huntington's criticism is valid today regarding the international aid regime toward the Palestinian Authority established in May 1994. It shows that international aid was initially based on economist assumptions, changed course to reflect the importance of the state, and now must seek a better balance between the centralization of power, developing state capacity, and promoting civil society.

Original languageEnglish
Pages (from-to)1243-1255
Number of pages13
JournalWorld Development
Issue number8
StatePublished - Aug 1997

Bibliographical note

Funding Information:
*Support for this study was provided by the Israel Science Foundation and the Harry S. Truman Research Institute for the Advancement of Peace at the Hebrew University of Jerusalem. It is a pleasure to thank Sheldon Gellar, Ian Lustick, Ira Sharkansky, Avi &gal, Sasson Sofer, Etel Solingen, Crawford Young, and the anonymous reviewers for their extremely valuable comments. We would like to thank Uri Resnick, who did almost everything: research assistance, typing, editing, and reading page-proof. Our thanks, also, are extended to Noam Shapira and Haim Izhaki for their research assistance. Final revision accepted: February 25, 1997.


  • Democracy
  • Economic development
  • International aid
  • Palestinian authority
  • State-building
  • World Bank


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