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Palestine is considered as a unique case, this is due to the circumstances surrounding this warm area. Since the start of the Israeli military occupation in 1967, the Palestinian economy has been operating under a highly artificial and destructive set of circumstances. Israeli occupation, besides destroying and distorting many aspects of civil life for Palestinian under military occupation, created a Palestinian economy totally dependent upon Israel. With the signing of the Oslo peace accord and the Paris protocol the Palestinian economy entered into a new era of economic arrangements. The PA was thus to be involved itself in the task of state building and creating a viable economy in preparation for sovereignty, with assistance from international donors. All parties to the conflict, Palestinian, Israeli, donors and international organizations have used this phrase Then there were severe obstacles to this goal in the Palestinian context. These obstacles, divided into security, economic and political spheres. But what went wrong? what are the main obstacles facing Palestinian economic development? and What is the possible impact of removing some of these obstacles?