Cyprus The Economy
Ruins of ancient aqueduct at Salamis near the
contemporary village of Ayios Seryios
CYPRIOTS HAVE EXPERIENCED A SUBSTANTIAL improvement in
their
living
standards since World War II. Cyprus benefited from the
war, and in
succeeding decades its economy grew at rates that matched
those of
other countries that profited from the general West
European boom
that began in the 1950s and lasted up to the first oil
price
increase of 1973. Cypriot per capita income increased
steadily
through this period; the economy diversified and ceased to
be that
of a Third World colony. This success was achieved despite
widespread turmoil stemming from shaking off British rule
in the
1950s and intercommunal warfare during the 1960s.
Cyprus was affected in 1973 and 1979 by the first and
second
oil price increases, for it was almost completely lacking
in
domestic sources of energy. However, energy-related
economic
disruption was negligible compared with the effects of the
Turkish
invasion of 1974, which ended in the de facto partition of
the
Republic of Cyprus. The island's economy disintegrated as
a third
of its inhabitants fled their homes and livelihoods and
many
farming, manufacturing, and commercial relationships were
shattered. Thereafter, the island's Greek Cypriot and
Turkish
Cypriot communities lived separated from one another. Each
sought
to recreate a functioning economy.
Greeks Cypriots were the more successful. Republic of
Cyprus
planners adopted an aggressive program of constructive
deficit
spending, economic incentives, and targeted investments
that led
the Greek Cypriot economy to reach pre-1974 levels within
a few
years. This was an astonishing accomplishment in that the
island's
partition had cost the republic much of its agricultural
and
manufacturing assets.
The 1980s saw healthy growth and low unemployment.
Tourism
swelled, and by 1990 more than a million tourists, mostly
from
Western Europe, visited the republic each year. Housing
them caused
much construction and an explosion in the value of
property along
the coast. Manufacturing and trade were encouraged and
grew. The
destruction of Beirut permitted the republic to become a
regional
center for services and finance. As the 1990s began, Greek
Cypriots
were upgrading their tourist trade and aiming at a more
diversified
and sophisticated manufacturing sector. Leaders of the
republic's
economy hoped to take advantage of the republic's able and
motivated work force and a strong and flexible commercial
tradition.
The Turkish Cypriot economy also grew. Facing many
obstacles
and beginning at a lower point, however, its successes
were
smaller, and at the beginning of the 1990s Turkish
Cypriots enjoyed
a per capita income about one-third that of Greek
Cypriots.
Economic obstacles included the lack of a commercial
tradition, a
less well-trained work force, and rampant inflation
largely
imported from Turkey. However, perhaps the most serious
economic
hurdle Turkish Cypriots had to surmount was their state's
lack of
international recognition. Its absence deprived them of
some
international aid and made foreign connections difficult.
Despite
these difficulties, however, Turkish Cypriots could look
with some
optimism toward the future. Tourism expanded rapidly in
the late
l980s and brought in vital foreign exchange. The overall
economy
had diversified to some extent. Agriculture was more
efficient and
employed a smaller share of the work force. The service
sector had
increased in importance. Analysts expected, however, that
the
Turkish Cypriot economy would likely continue to need
Turkish
assistance for the foreseeable future.
Data as of January 1991
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