STATE FORMATION AND INTERNATIONAL AID - THE EMERGENCE OF THE PALESTINIAN AUTHORITY

Thirty years ago, Samuel Huntington criticized Western aid policy towa rd new states that assumed that economic improvement in the standard o f living coupled with democratic institutions would yield a more stabl e and democratic state-building process. An extensive political econom ic literature on the developmental state has since emerged that explor es the complex relationship between stare capacity, economic developme nt 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, do es 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 s tate 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 Authorit y established in May 1994. It shows that international aid was initial ly based on economist assumptions, changed course to reflect the impor tance of the state, and now must seek a better balance between the cen tralization of power, developing stale capacity, and promoting civil s ociety.