Communal Conflict and Economic Considerations: the Case of Cyprus

This article attempts to demonstrate the contribution which better economic inte gration can make to the peaceful coexistence of the Greek and Turkish communities on Cyprus.

It is asserted that interdependence in the economic sphere brings interaction and eventual dependence of one community on the other for their continued existence. The analysis demonstrates that economic interdependence with free flow of resources between the communities contributes to minimizing income inequality, which in turn is seen as a condition conducive to social stability.

Estimates made of income distribution' between the Greek and Turkish communities demonstrate that the Greek Cypriots with 77.1 % of the population have 80.2% of the income, while the Turkish Cypriots with 18.2% of the population have a low 12.6 % of the income. In turn data from the manufacturing sector are used to demonstrate that allocation of capital and labor within this sector on the basis of economic considerations (not ethnic) will favorably serve the economic welfare of both communities, with particularly beneficial effects for the minority.