The thesis examines policy making, especially in the shelter sector, from a different perspective: the impact of the macro-level political economy on the micro-level intervention. To establish this relationship more precisely, a conceptual framework which explores the effects of the role and nature of the state, foreign aid (USAID), and economic reform (IMF/World Bank) is utilised. This framework is deployed to investigate the interaction between these three key elements and how they affected shifts and changes in shelter policies in Egypt from the 1950s. By 1952 the government assumed a more central role in service provision with its socialist orientation. On the macro-political level, dramaticc hanges have taken place since then, but, in effect were not mirrored with adequatere form on the structural or organisational levels, with regards to tackling the shelter needs of the country. The core of the thesis explores, from the shelter sector perspective, the role of the state as an interest mediator throughout different periods. This reveals that the shelter sector always formed an important investment priority susceptible to both internal and external determinants. Internal determinants are related to domestic priorities influenced by changes in the social structure, class interests, and resource allocation. External determinants concern the role played by international agencies in promoting development models in which the shelter sector plays an often uncertain role, or direct political pressure as a part of geo-strategic concerns. The state's receptiveness and ability to mediate is constrained by the extent to which external agendas fit or conflict with the state's development ideology, perceptions of equity, social justice and stability. Using an inductive approach, the empirical evidence is drawn from interviews with key figures in policy making as well as independent observers. The thesis argues that in order to provide a refined understanding to the housing question it has to be put in its broader socio-economic and political context. Outcomes have generally been technocratic solutions to a problem that is largely structural in nature. The gap between the political and technocratic levels of policy making and implementation is a central theme in the study. The distinctive responses to the shelter question, from both levels, over four decades in Egypt, and under a highly complex and rapidly changing political environment are reflected in the outcomes. Perceptions, priorities and criteria driving decision making of key actors, and the state's central role in mediating between external and internal interests, as well as its own, were the main themes deployed in the investigation. The findings suggest that policy making is an outcome of the interaction among the needs of the state (especially the autocratic tendencies of the leadership, and the technocrats) and external forces which determine policies according to a different agenda (geo-political): outcomes, therefore, may not be generated by a conscious policy making process, but rather, directly, from political impact. The study also suggests that structural changes in development paradigms do not appear to be the main determinant of policy shifts. A combination of short-term and specific international objectives and national interests of the state appear to be more instrumental in policy shifts and modifications in approaches.