The impact of the European Economic Community on the economic structure of the Turkish Republic of Northern Cyprus.

The Cyprus problem started in 1963 with the first coup of the Greeks. The second coup in 1974 by the Greeks aimed to annex Cyprus to Greece and the counter intervention of Turkey led Cyprus being divided into two. The Turkish Republic of Northern Cyprus (TRNC) in the North and the Greek Cypriot Administration in the South. This research uses input-output theory in analysing the economic structure of TRNC in 1986. Descriptive analysis, enabled comparison of the two economies of the Island. Linkage analysis provided a better understanding of the interindustry relations. Computation of type I and type II output, income, and employment multipliers, and the source of output, income, employment and competitive imports for final demand categories gave a further information about the structural interdependencies of the industries. Using Klein's adopted model for the TRNC economy, OLSQ, LSQ, 2SLS, and NL-2SLS estimation methods are compared in their backward and forward performances over a period of 1977-1988. Dynamic multipliers are also computed. Financial aid received from Turkey was 11 times more effective than aid received from the EEC. Forward projections showed that unless the financial aid received from the EEC is given with respect to need rather than to the projects in the South, or a separate agreement is made with the TRNC, then the present financial aid has very negligible effect on the TRNC economy.