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GNP had suddenly jumped by 62.2% in real terms as a result of windfall gains.
Now Turkish-Cypriots had a real economy to manage, however, they still faced
severe institutional and political constraints. Exogenous constraints derived from
diplomatic isolation and endogenous constraints derived from ambiguous property
rights, and strategic and political priorities which may still have clashed with
rational economic objectives; for example, the need for a dispersed rural settlement
policy. The Turkish-Cypriot community developed institutional innovations to
compénsate for the underdeveloped nature of the private sector. In the light of
newly established external constraints in an expanded economy, Eti, Evkaf and the
co-operative movement provided the essential mechanism for economic revival, in
the absence of some of the basic pre-requisites of a market economy. To these,
Turkish-Cypriots, following Turkish advice, added new institutions. Ad hoc state
enterprises were set up to deal with the problems of utilising an expanded resource
base, such as Cypruvex, and were designed to overcome endogenous and exogenous
constraints affecting the marketing and distribution of citrus producís.
The problem facing the regime in the late 1970's as it established itself north of the
UN Buffer Zone, was the dislocation of transport, processing, packaging, marketing
and distribution from production which had largely lost its human capital and the
means of mobilising resources (with the continuing insecurity over property rights
incentives have remained something of a taboo problem"). Diplomatic isolation and
persistent political insecurity meant that necessary new investment was difficult to
attract from countries other than Turkey which had its own major economic
problems. It was allegedly on this basis that an expatríate Turkish-Cypriot
businessman, Asil Nadir, was approached and for this reason: to exploit and
develop assets in northern Cyprus. Before 1980 the Nadir family had only a very
minor stake in the economy of northern Cyprus, using home-based workers for
99 Scott 1998. op. cit., pp. 156-157, 159.
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