The Effectiveness of Foreign Aid in the Palestinian Economy

Unpublished working paper. Prepared during postgraduate study at the Doha Institute for Graduate Studies; not published in a peer-reviewed journal. The full text is in Arabic and available as a PDF from the top of this page.

Abstract

The Palestinian economy depends heavily on foreign aid, formalised after the Palestinian National Authority was established in 1994. Palestine has since ranked among the largest per-capita recipients of international assistance, with aid exceeding US$36 billion by 2020.

Despite that volume and its stated aim of supporting the Authority's establishment, aid has run into Israeli restrictions and measures as well as internal Palestinian obstacles, imposing substantial losses on the economy.

The paper studies the impact of foreign aid on the Palestinian economy and seeks to explain why its positive effects remain weak even as its volume rises, and how effective it has been in producing development. It uses descriptive-analytical method grounded in an extensive review of prior literature.

Sections

• Conceptual framing: defining foreign aid and the difficulty of measuring "aid effectiveness"
• Why aid effectiveness is weak in developing countries — corruption and weak policies and institutions in recipient states
• Shortcomings of aid to Palestine: evidence from earlier studies
• Problems in the methodology and orientation of aid

Sources

The paper draws on UNCTAD reports, the Palestine Economic Policy Research Institute (MAS), the Arab Planning Institute, and international aid-effectiveness literature including the work of William Easterly.