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Figure 2.18 Changes in the composition of external financing (% of total), compared with changes in total debt (debt outstanding & dispersed - DOD) as a % ofGNP. 70% -- Multilatéral — — -Bilatéral Suppliera crédits Financial Maikets X DODX3NP {%) Source: Woiii DebtTablcs. The World Bank's "Debt Outstanding and Dispersed" (DOD) category was below 10% of GNP and fairly stable before 1974. The coup and invasion precipitate a ratcheting of foreign financing that continues to rise well into the 1980s, peaking at around 40% of GNP (Figure 2.18). The coup and invasion are also followed by a change in the composition of foreign financing; multilatéral aid, the major pre 1974 financing item, accounting for 50% of external credit, rises sharply in 1974, peaking at a three quarter share of ail external financing in 1976. Suppliers crédits, another significant pre 1974 financing item, declined rapidly after de facto division. Bilatéral aid generally continued a long term decline, the events of 1974 having little impact on its contribution to overall external financing. In 1976, as supplies crédits, bilatéral aid continues to decline and multilatéral aid drops back to a 50% share of external credit, 95
financing from financial markets picks up and grows rapidly, overtaking multilateral aid in 1978 and remaining the dominant source of external finance until 1985. Between the 1960s and the late 1980s when the Republic of Cyprus moved from being one of the lowest debtor countries to being one of the highest, it had experienced significant and rapid economic restructuring. The structure of employment and the composition of GDP had changed profoundly between 1970 and 1980. Both in terms of the composition of exports and the direction, Cyprus appeared to have matured as an economy, being less dépendent on a few primary products and less dépendent on old colonial links. The watershed for ail of these changes, again unsurprisingly, was the de facto division of the island, north and south. So while many of the real costs of war were reflected in the labour market, structural unemployment rapidly took on the appearance of frictional unemployment, as much of the financial costs of restructuring were borne by foreign aid and, increasingly, by the world's money markets. The same period saw a ratcheting of the tax bürden on the economy. While statistics before and after 1970 are not compatible 58 , prior to 1970 both taxes on income and expenditure had gradually declined as a percentage of GDP. In 1960 "taxes on expenditure" represented the équivalent of 10% of Republic of Cyprus GDP whilst "taxes on income" represented 5%. By 1970, "taxes on expenditure" had fallen to 7% and "taxes on income" to 3%. Similarly, using the newer Statistical catégories, in 1970 "indirect taxes" represented the équivalent of 8% of the Republic's GDP, and "direct taxes" represented 4%. The total tax bürden in that year, which included social security contributions, represented 13% of GDP. By 1974, the composition of tax and total tax bürden was unchanged, although the intervening few years experienced some 58 Republic of Cyprus, 1994. Historical Data on the Economy of Cyprus, 1960-1991. Nicosia: Ministry of Finance, Dept. of Statistics and Research, pp. 41-42, 143-144; Republic of Cyprus, 1995. .Statistica! Abstract 1993. Nicosia: Ministiy of Finance, Dept. of Statistics and Research, p. 290. 96
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ACKNOWLEDGEMENTS I would like to th
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ABSTRACT This thesis examines the e
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Table Of Contents Page Change in ec
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List Of Figures 2.27 Revenue from t
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List Of Figures 5.25 Main destinati
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List Of Figures 7.8 The degree of o
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List Of Tables 6.7 All island, Gree
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This thesis will examine the econom
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Vassiliou's classic work 5 publishe
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As many questions raised by economi
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Figure 1.1 The structure of recent
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In terms of the topic of this thesi
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political landmark coincides with a
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were the mechanisms which encourage
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however, Chapter 5 concentrates on
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Defining the title The first priori
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such? Is northern Cyprus simply run
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unlike Greece in 1923, were already
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itself as having been literally und
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economic history, Christodoulou's s
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incurred as a resuit of eonfl ict.
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Christodoulou has concentrated his
Page 45 and 46: any credit for successful economic
Page 47 and 48: anking technology, administrative c
Page 49 and 50: (which usually has a regressive imp
Page 51 and 52: contribution did labour remittances
Page 53 and 54: having been inspired by Zetter's in
Page 55 and 56: econstruction also provided a means
Page 57 and 58: Conclusion In analysing the extent
Page 59 and 60: he drew distinct analogies with the
Page 61 and 62: in Cyprus. The main objective is a
Page 63 and 64: The war proved a watershed in many
Page 65 and 66: Uruguay, Japan, Trinidad and Tobago
Page 67 and 68: financial, property and business se
Page 69 and 70: By 1960 exports represented over 20
Page 71 and 72: Table 2.1 Domestic Exports FOB in 1
Page 73 and 74: the period (1960-73), the différen
Page 75 and 76: Figure 2.4 Principal exports as a p
Page 77 and 78: producing 12% of GDP. Tourism (rest
Page 79 and 80: considerably more than Turkey, whos
Page 81 and 82: income. Mining and quarrying (now m
Page 83 and 84: Figure 2.10 Principal exports as a
Page 85 and 86: Figure 2.12 The Destination of the
Page 87 and 88: Figure 2.14 Ambiguous indicators: T
Page 89 and 90: Figure 2.15 Sìze of manufacturing
Page 91 and 92: By 1980 the economy of the Republic
Page 93 and 94: The scale of the disruption in the
Page 95: Whether taking the optimists approa
Page 99 and 100: grew rapidly. In the immediate afte
Page 101 and 102: One of the major problems facing th
Page 103 and 104: coming, only concerning policy make
Page 105 and 106: with particular bottlenecks affecti
Page 107 and 108: "We attributed this finding to the
Page 109 and 110: aiding the recovery from the coup a
Page 111 and 112: employment: rapidly rising real ear
Page 113 and 114: Until the intervention of public fi
Page 115 and 116: to pick the Republic of Cyprus as t
Page 117 and 118: of offshore companies registered in
Page 119 and 120: Figure 2.27 Revenue from the offsho
Page 121 and 122: Figure 2.29 The changing compositio
Page 123 and 124: The structure of the economy, the c
Page 125 and 126: CHAPTER 3. The foundations of Takis
Page 127 and 128: Famagusta enclaves would be over-ru
Page 129 and 130: The historical context of separate
Page 131 and 132: generally concentrated in the lower
Page 133 and 134: agreed Constitution. Seemingly Clar
Page 135 and 136: séparation of the communities bega
Page 137 and 138: UN. 37 Some additional supplies mus
Page 139 and 140: Seemingly, by 1970 the Nicosia encl
Page 141 and 142: was made on the basis of a fixed in
Page 143 and 144: derived from Turkish transfer payme
Page 145 and 146: Patrick has offered a more complica
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spare parts and maintenance materia
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Emphasising the growing divisions b
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Chamber, Rauf Denktash, said people
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Figure 3.2 Thepossible economic eff
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produced by them rises significantl
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Committee" was the area military co
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February 1975 the latter bodies set
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The first five-year pian, published
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CHAPTER 4. The construction of a Tu
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Whilst the Turkish-Cypriot leadersh
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of supply, and/or marketing, in key
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shipment of 2000 tons of foodstuffs
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Eti still operateci out of Nicosia,
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institutions in northern Cyprus amo
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with multipurpose co-operatives, a
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A few new co-operatives were formed
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loans. Savings Banks do have access
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espectively. The Famagusta branch w
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Cypriot) Government in the 1960s, t
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increasing costs 31 . This is perha
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packages imported raffinate, supply
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a monopoly respectively. Where ther
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Evkaf is an Islamic organisation fo
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Evkaf had a largely obscure economi
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Meanwhile a little noticed phenomen
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After the summer of 1974, the Turki
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monitored Ledra Place check-point,
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the early eighties, when Turkish ar
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Figure 4.3 Number of tourists from
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the situation that had existed prio
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stay arrivais or diminish with the
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competing with the longer establish
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flexibility of family business stru
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Ltd., Turkish-Cypriots eventually g
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dominateci by: textiles, footwear a
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force of national cohésion, change
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Figure 4.9 Main Citrus Exporters in
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Ismail Bozkurt (who secured 32.1% o
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Table 4.9 Citrus exports from north
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Ultimately the failure to act on pr
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CHAFTER 5: Re-establishing economic
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prospects of their respective de fa
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Figure 5.1 Change in Cypriot GDP as
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{0 perceive the de facto situation
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Turkey maintains that her objective
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parliament during the unstable peri
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case study, he argues that given en
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Specifically, it is analysis of nat
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imports (Figure 5.5). The extent to
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(which includes the increasingly im
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If "a leading sector in the process
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Just to put minds at rest that manu
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encouraged private sector action, t
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Figure 5.13 Gross domestic fixed ca
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major economic force, one that was
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they account for around a third of
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dominates international transfer pa
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a "development resource" 54 , rathe
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able to spearhead a revival aided,
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path, policy objectives moved to co
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overwhelming dependence on a genera
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In the difficult times that followe
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independence from total Turkish fin
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Figure 5.20 Orange production as a
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e exchanged for new "TRNC" (or, as
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Unlike the vineyards where most of
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Although not important in the initi
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Having said this, constant improvem
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compensation arrangements in the no
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some of the labour intensive stages
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Figure 5.24 Proportion of citrus ex
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to treat exports from the whole of
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seem more politically motivateci an
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Figure 6.1 Percentage change in GNP
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initially. The more immediate probl
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historical phenomena (large externa
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It has been argued that if politics
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share of National Income to somethi
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Figure 6.6 Communal income in 1980,
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Selecting peers as proxies for pan-
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growth potential to Cyprus in 1960,
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was that compatible data should be
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Figure 6.9 Micro Economies; average
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Figure 6.11 Micro Economies; averag
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Figure 6.13 The level of government
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Figure 6.14 "More Developed Medìte
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Figure 6.17 "More DevelopedMediterr
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Cypriot growth rate, should not dis
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Figure 6.22 Structure of production
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Figure 6.26 Degree of openness in t
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economic growth 49 (variables 6-9:
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implication, developmental différe
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spectrum in 1980 at 38%. Perhaps le
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namely investment rates 54 (in phys
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instruments, the justification for
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Figure 6.28 Average annual growth i
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Figure 6.29 How Cyprusfared in 1980
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Figure 6.30 Total Cypriot income 19
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o.zö; may reveai someimng 01 ine e
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developments elsewhere. The relativ
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unified economy) of 1963, Cyprus is
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CHAPTER 7. Conclusion 348 Comparati
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Turkish-Cypriot economy stagnateci.
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So it is worth looking again at the
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stand out however, revealing enough
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Figure 7.3 Gross domestic investmen
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Figure 7.5 "TRNC netforeign trade a
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Figure 7.8 The degree of openness i
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control. There seems to be ampie ex
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The role of tourism in the economic
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seem to be able to grow in line wit
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Comparisons throughout this thesis
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The Cyprus Mail Hellenic Group. Nic
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I.M.F. International Financial Stat
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1982. Fourth Emergency Economic Act
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"Turkish Federated State of Kibris"
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leadership of the two communities o
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"administrations" and key economic
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Bicak, H.A. (June) 1990. "The Impac
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Hudson, J. and Dyniotou-Jensen M. 1
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Mcdonald, R. 1989. The Problem of C
Page 389 and 390:
Solsten, E. (ed.) 1993. Cvprus: A c
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