| Abstract
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This dissertation titled: "Capacity of the Governance Structure of Palestine to Undertake Local Economic Development" focused on two main areas of research, (1) the central-local government relationship (centralization vs. decentralization) and how this relationship affects the capacity of local governments to undertake local economic development; and (2) variations among LGUs in terms of size and stability and the influence of these variations on the functioning or alternatives of governance, decentralization and local economic development. The study explored and analyzed the legal, governance, economic development and planning dimensions of three points of ambiguity and disagreement between central and local governments, namely property tax collection, public land management (located within LGUs' boundaries), and the relationship of LGUs with non-Palestinian partners (donors/investors) with a direct affect on the capacity of the governance structure in Palestine to undertake local economic development. A wide range of documents, reports and organizational records were reviewed and analyzed. Participant observations, focus groups and 41 intensive interviews were conducted with decision makers at the central and local levels including: mayors, municipal managers, heads of departments, central government officials in various agencies, and active members in the private sector and civil society organizations. Findings revealed that central government is responsible for collecting the property tax, managing public land located within LGUs' boundaries and restricting almost all LGUs from making direct contact with foreign investors and donors. Large municipalities are more financially capable and independent and more politically powerful than smaller municipalities. However, both historical circumstances and the realities of building a new Palestinian state had promoted strong tendencies towards centralization. Although Palestine appears to be moving towards a more democratic, centralized system of governance, it does not seem to be practical or feasible because of the reality of the occupation. Decentralization after merging small local government units into viable size municipalities could be a promising solution, providing the advantages of simplicity and clarity of forming a single system of local government units covering the whole of the Palestinian Territories.
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