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south. Data in the above graph also does not include the contribution made by the cooperative
movement, the Church, Evkaf, and state sector companies. As argued in the
preceding pages, the contribution of quasi-state sector institutions is almost certainly
considérable. Bearing in mind the contributions of these other public and quasi-public
sector institutions (detailed in Chapters 2, 4 and 5), this offers a partial explanation as
to why the de facto Greek-Cypriot economy in the south performed better than the de
facto Turkish-Cypriot economy in the north. The conclusion implied by Figure 7.2
(above) is that 'big government' may nave led to a general under-utilisation of
resources. In the absence of an alternative, the public and quasi- public sector stepped
in to run abandoned resources in the north; this short term recovery mechanism
persisted into the long term. Combine big government with insecurity over property
rights and private, long term investment suffers, and resources may remain underutilised.
In the World Bank's cross-economy regression results, investment rates were the
strongest single policy indicator correlating with economic growth 9 . How did the two
Cypriot économies compare in terms of investment rates during the 1980s, both with
each other and with the small open island économies and the "More Developed
Mediterranean" économies discussed in Chapter 6. Figure 7.3 makes those
comparisons, between the Republic of Cyprus, the "TRNC" and the Micro Economies.
The Republic of Cyprus finds itself at the positive end of the spectrum, whilst the
"TRNC" is at the other end.
9 IBRD. 1993. The East Asian Miracle: Economic Growth and Public Policy. NY: OUP. pp. 48-54.
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