This report explores the disparity between models for enabling economic activity in the West Bank and Gaza in an era of self-rule, and the outcomes of the interim period by 1998. The first chapter introduces the thesis that the dependent character of the economy, which developed under military occupation, remains fundamentally unchanged since 1993, and reviews the economic structure and recent political history of the West Bank and Gaza. The second chapter reviews a model, which dates to the early 1990s, for Palestinian development under self-rule. In chapter three are summarized the results of bi-lateral negotiations, between Israel and the Palestinians, which have set the scope for implementing development plans and conducting economic activity generally. Chapter four suggests salient reasons for economic decline, and the persistence of the old economic geography of Israel/Palestine during the interim period. Central to the discussion is the question of whether the transitional government has been provided the tools necessary for development.