“ Partial Statehood ” and Local Fiscal Capacity in the West Bank ∗

This paper takes advantage of the overlapping geographies of Israeli military and Palestinian civil authority in the West Bank to examine the association between “partial”, or “fragmented”, statehood at the national level and the fiscal capacity of local governments. The main empirical finding is that local governments in areas of the West Bank that operate under shared Israeli-Palestinian control raise less revenue than those that operate under areas of full Palestinian control. When looking at total revenue per capita, this can be explained largely by underlying differences in economic development. When looking at a specific revenue source (fees from building and construction permits) that requires local government enforcement effort and popular compliance, it is suggested that the difference has to do with the specific institutional arrangements of the occupation and “partial statehood.” The first half of the paper explains the unique Palestinian context and tries to relate it to existing conceptual frameworks on autonomy/devolution and direct versus indirect rule, and the second half of the paper presents the initial empirical findings and an abbreviated discussion of potential causal mechanisms. ∗Draft prepared for the Comparative Politics Workshop at the University of Michigan. Please do not cite without the author’s permission.