In 1960, the newly formed Government of Cyprus inherited an economy which exhibited most of the symptoms of underdevelopment. The productive base of the country was inadequate and economic activity was dependent upon unstable factors. Agriculture was the dominant sector in economic activity and accounted for 16% of GDP and 45% of gainful employment; manufacturing activity was essentially restricted to the processing of locally produced agricultural raw materials; tourism had not yet taken off; exports had the characteristic structure of underdeveloped countries, with primary commodities, such as minerals (53% of the total) and agricultural products (32%), dominating; unemployment was high, underemployment was widespread and mass emigration was taking place; financial capital was flowing out of the country, a clear indication of the existing uncertainty.

In view of the structural weaknesses of the economy, the Cyprus government adopted the basic principles of indicative planning, according to which private initiative is the basic motive force of the economy and the role of the state is to create the necessary physical and social infrastructure, create a stable and favourable economic environment, guide the private sector towards desired directions and administer social policy. The development strategy and the economic policies of the government were embodied in Five-Year Development Plans.

Source: www.kypros.org