Download (28Mb) - LSE Theses Online

Seeraingly the main rôle of the government of the Republic of Cyprus in the
economy was securing and directing investment by utilising external loans, grants
and foreign exchange reserves. It is the expansion, scale and direction of that
investment that is controversial.
The need to intensify efforts for the reconstruction of the economy on the
basis of a comprehensive action plan instead of undertaking various ad hoc
measures as up to now, is imperative. The whole effort must be put on a
planned and co-ordinated basis; hence the need for an Emergency Action
Plan.... 29
The public sector is expected to play a leading rôle in the boosting of
investment activity instead of a supplementary or ancillary rôle as was the
case so far. 30
The introduction of public works after exogenous economie shocks is not a new
method of applying disaster relief. Such policies were, for example, used by the
Government of Cyprus long before Keynes published 31 . Zetter's basic premise is
more sophisticated and more closely Keynesian 32 : government spending did act to
alleviate a humanitarian disaster but in doing so tapped under-utilised resources,
restoring confidence in a key domestic investment sector and, through an income
multiplier stimulated domestic manufacturing, thus rapidly shifting output and
employment back to pre-war levels. Fiscal policy and deficit financing facilitated
government investment in the construction industry, created homes and incomes for
refugees, work and income in the construction industry, distributed income and thus
stimulated demand as the newly re-housed, newly urban work-force replaced
possessions left behind in the scramble south.
29 Republic of Cyprus. 1975. Emergencv Action Plan 1975-76. Nicosia: Planning Bureau, p. 11.
30 ibid., p. 14.
31 During the drought of 1901 and 1902, the British District commissioner of the Famagusta District,
after making a tour of the région promised to cali on the Government to continue with public works
to help alleviate the problem. Weeldy newspaper, Kyprios, 23/02/1902, Nicosia.
32 Zetter 1992. op. cit., pp.7-39.
239