In the midst of the chaos and violence of civil-ethnic conflict, there is often little attention paid to the economic consequences which endure long past the moment of crisis. In conflicts that end in situations of prolonged occupation of one national group over another, complex and enduring dependencies develop between occupier and occupied.

Since the 1967 Israeli occupation of the West Bank and Gaza Strip, the Palestinian economy has grown highly dependent upon the Israeli economy and has developed within the confines of Israeli military power. When the second Palestinian Intifada broke out in September 2000, the Palestinian economy suffered further.

This paper discusses the Palestinian economy through the framework of dependency theory and world-systems analysis. Both theories are used to explain the complex relationship between Israel and the Palestinians and the relationship of dependence that has been perpetuated by Israel since the signing of the Oslo Agreement in 1993.