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DEVELOPMENT CHALLENGES OF NORTH CYPRUS

DEVELOPMENT CHALLENGES OF NORTH CYPRUS. Introduction. North Cyprus is a micro-state which has a landmass area of less than 10,000km. The population is approximate 300,000 people. About 50.2% of the population lives in rural areas. 39.8% lives in urban centers.

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DEVELOPMENT CHALLENGES OF NORTH CYPRUS

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  1. DEVELOPMENT CHALLENGES OF NORTH CYPRUS

  2. Introduction • North Cyprus is a micro-state which has a landmass area of less than 10,000km. • The population is approximate 300,000 people. • About 50.2% of the population lives in rural areas. • 39.8% lives in urban centers. • According to 2009 statistics, the literacy level is 90%, while the percentage of graduates is 68%.

  3. Introduction (Cont’d) • The economy of TRNC is predominated by services sector which account for 69% of GDP in 2009 • Industries and Agriculture contributed 22% and 9% respectively to GDP in 2009. • Though North Cyprus is suffering from trade restrictions, it has done remarkably well by increasing her Per Capita Income from $350 in 1974 to over $16,000 in 2009.

  4. The Harrod-Domar Growth Model • Harrod-Domar growth model is used in development economics to explain an economy’s growth rate in terms of the level of savings and productivity of capital. • The model implies that economic growth depends on policies to increase investment by increasing saving and using that investment more efficiently through technological advancement.

  5. Development Challenges of North Cyprus and the Harrod-Domar Model • We try to outline the development challenges of North Cyprus based on Harrod-Domar theory. (1) The saving rate is not high enough in North Cyprus. The more an economy saves, the more it will grow.

  6. Development Challenges of North Cyprus and the Harrod-Domar Model Saving History of North Cyprus as a Percentage of GNP

  7. Development Challenges of North Cyprus and the Harrod-Domar Model (2) The level of investment/GNP in North Cyprus is low.

  8. Development Challenges of North Cyprus and the Harrod-Domar Model (3) Another challenge of North Cyprus is lower per capital income, which is used to measure the standard of living. The richer the country, the better she saves. Per capital income was $16,000 in 2009 while that of Singapore was $52,000.

  9. Development Challenges of North Cyprus and the Harrod-Domar Model (4)Harrod-Domarmodel also takes into cognizance, technological progress as a major component of growth. North Cyprus is not really investing in Research and Development which can boost technology in future. Also, investment in capital is low in North Cyprus. The growth rate of output per worker in 2009 was 2.1% while that of Singapore was 5.6%.

  10. Policy Recommendations • In order to overcome the aforestated challenges in North Cyprus, these are the recommended policies:

  11. Policy Recommendations (1)Saving rate is not enough in North Cyprus, therefore, this saving rate needs to be increased to a significantly higher percentage.

  12. Policy Recommendations (2) The government should establish micro- credit loans in line with Harrod-Domar model of government intervention. This will speed up rate of investment.

  13. Policy Recommendations (3) Government should encourage savings and deposits to be made into TRNC banks and not “foreign” banks.

  14. Policy Recommendations (4) Government of North Cyprus may overcome her economic challenges by engaging in capital accummulation and Research and Development leading to advancement in technology in future.

  15. Policy Recommendations (5) Finally, the government of TRNC should work toward settling the dispute with the Republic of Cyprus in order to break trade restrictions.

  16. Conclusion • Having looked at the development challenges of the North Cyprus within the context of Harrod-Domar growth model, we can say, apart from increasing savings which generates investment, the government must prevent further diversion of savings and invest more on research and development which brings advancement in technology. • With this policies in place, North Cyprus may soon emerge as a high income country with appreciable increase in standard of living and welfare for the entire population.

  17. Vote of Thanks • We appreciate your attention!!! Presentation was prepared by: Tunde Benjamin Ayeni 099256 Okechukwu Christian C. 115078 Firat Emir 084510 KorhanKoc 050648 RafiatAtilola 099244

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