CHAPTER ONE
INTRODUCTION
1.1. Background Of The Study
The tourism industry is a very vast industry which encompasses a lot of other industries such as agricultural industry, entertainment industry, communication industry etc. the tourism industry which is also known as the non-smoke industry plays a key and crucial role in job creation and helps immensely in contributing to the Gross Domestic Product (GDP) of a country. Tourism is one of the most dynamic and fastest growing sectors of the economy of many destinations [1]. Countries like Bermuda, Hong Kong, Singapore and Northern Mariana Islands successfully exploited the ability to take advantage of favorable climate and location, vastly expanded tourism sector in the Asia Pacific region[2] and exploited their positive climatic and also benefited from their favorable climatic and area points of interest to dispatch tourism based economical advancement respectively.
For North Cyprus, Tourism is the basic priority sector for its economic development. It is one of the main generators of income for North Cyprus. It remains an important source of revenue for Northern Cyprus which includes the one of the most beautiful coastlines and mountain ranges in the Mediterranean. In 2005, the tourism industry contributed $145.6 million (3.3 per cent) to the GDP of North Cyprus and created 9224 jobs which account the 9% of total employment [3]. In 2011, there was a 45% increase in tourist which fell down in 2012 to 15%. This went up again in 2013 by an increase of 30%. From fifty countries, more than a million tourists came into North Cyprus. Net tourism income has the most astounding offer in undetectable record and is utilized generally to compensate trade shortfall.
Casino tourism has also contributed to the economy of North Cyprus after the mid 1990’s. Since casinos in Turkey were prohibited, massive investments on casinos were made in North Cyprus by domestic investors and the investors from Turkey. Weekends are high due to the visits from Turkey to the casinos in North Cyprus.
North Cyprus has amazing geographical location, favorable climate, history and natural beauties in the island. To develop this sector, plan include: attracting more tourists from abroad, prolonging average stay periods in tourist foundations, preventing seasonal fluctuations in tourism sector, increasing tourism revenues, increasing internal tourism, accepting mass tourism, implementing effective marketing and recognition activities and events, arranging education programs on tourism and increasing bed capacity.
Transportation is not left out as well. Even though political risk and/or international non-recognition has negatively affected tourist flows into the countries, objectives on ground are increasing personnel standards, increasing marketing activities in potential countries, encouraging foreign business owners and entrepreneurs into investing in the tourism industry and directing lawful courses of action about tourism sector,, establishing a strong cooperation between domestic tourism foundations and foreign travel agencies and improving tourism incentives, increasing the number of tourists from the less developed countries, accelerating recognition exercises and setting up competitive prices in tourism commercial enterprises, initiating flights to Europe to accomplish direct flights.
In addition, the tourism industry does not only contribute in job creation within the tourism sector but also creates jobs in the other domestic industries, such as transport, agriculture manufacturing and some other services sectors. Therefore, promoting the development of North Cyprus tourism market will create more opportunities for the country’s economic growth.
It is very important to explore both international and domestic tourism markets and to make considerable efforts in exceeding the tourists’ expectations to attract their return as this would help in developing the tourism industry. For the level to be actualized, the industry needs to take into careful consideration of the tourists needs to serve the better and respond satisfactorily to their demands as to attract their returns.
1.2. Purpose Of The Study And The Research Questions
The purpose of this study is to acquire international visitors’ feedbacks on North Cyprus as a tourism destination by examining the link between their perception and expectation during their visit. The collected information in this study will help in evaluating the on-ground situation of tourism in North Cyprus and thereafter figure out how it correlates to tourists’ satisfaction.
Listed below the questions of this research study;
1. What did the tourists expect from North Cyprus as a tourism destination?
2. What are their both positive and/negative perceptions of North Cyprus during their visit?
3. What is their satisfaction or dissatisfaction level with North Cyprus tourism industry?
4. How can these levels be improved upon?
1.3. Aim Of The Study
The thesis’ aim is to examine the level of international tourists’ satisfaction in North Cyprus and thereafter proposals will be made to help in the improvement of the tourism industry in North Cyprus.
At the end of this study relevant suggestions will be made for the improvement of the tourism sector and report will also serve as reference for further future studies on this topic.
1.4. Study Outline
There are seven main segments in carrying out this research study these are; research questions identification, literature review, data investigation and collection, data analysis and results, proposed suggestions and finally conclusion.
This study made use of quantitative research method in answering the research questions so as to get complete insight on the issues of the study and also to help make available enough information for future studies on this topic.
CHAPTER TWO
LITERATURE REVIEW
2.1. Introduction
The theoretical framework of the study focuses on the basic concept of tourism, tourist’s satisfaction, the attributes of a destination as it affects tourists’ satisfaction, and on analyzing the relationship among these attributes and tourists’ satisfaction with relation to their demographic and travel behavioral characteristics.
This chapter begins with discussing the definitions of tourism. After which, the chapter discusses previous research on the concept of tourist, such as tourists’ characteristics, perception, expectation, and satisfaction. Finally, focuses will be made on the relationship among the attributes of destinations and tourists’ satisfaction.
2.2. Tourism
There are so many definitions of tourism. World Tourism Organization defines tourism as a social, cultural and economic phenomenon which involves people moving from their usual environment to places outside their usual environment for different reasons which could be personal or business/professional [4]. These people are referred to as visitors (which may be either tourists or excursionists; residents or nonresidents) and are required not to spend more than one consecutive year.
Tourism or voyage originally means movement of people with the intention of trade and conquest [5]. Holden in 2000 stated that “Nowadays, this phenomenon has experienced a shift towards pleasure which serves as a symbol of social status. It was influenced by media like social networks, web-based promotions and advertisement, and greater leisure awareness; tourism has become one of the rapidly growing industries in the world [5] .
According to Krapf and Hunziker tourism is the “sum of the phenomena and relationships arising from the travel and stay of non-residents, in so far as they do not lead to permanent residence and are not connected to any earning activity” [6].
From the definitions mentioned above, tourism can be seen as any activity which an individual, a group of individuals or an organization undertakes that goes out of their immediate residence sojourning to another place without a primary motive or intention of making a monetary or some other profit.
2.3. Tourists’ Characteristics
The characteristics of tourist were studied by many researchers, some of which this study reviewed; theses authors had almost the same views. For instance Ivanovic (2008) identifies three different classes in which tourists characteristics can be expressed which are often useful in tourism research or marketing and promotion strategy. First is the demographic features included age, education, income, occupation, gender, marital status, family status, ethnicity. Secondly is the tourist socio-economic condition, which referred to how the tourist to be able to afford to engage in a chosen destination. Lastly is the tourists’ behavioral characteristic which has to do with understanding of needs or desires, motivation and travel awareness of a tourist [7].
Zhu (2010) – tourist characteristics were modeled as a formative constructs consisting of customers’ socio-economic characteristic and previous consumption experience and addition of tourist characteristic such as demographic and cultural background are valuable as to allow one to distinguish tourists’ satisfaction levels [8].
Certain scholars such as Tassiopoulos (2008) and Ivanovic et al (2009) found that demography which consist of such factors as gender, income, age, family lifecycle, social status, occupation and educational level has some level of influence on tourism demand and these diversities make the tourism business more successful [9] [10].
Hond and Prideaux, (2000) dissected the variance by age, gender, occupation and past trips of Taiwanese cultural/heritage vacationers to learn if demographic and travel behavioral characteristics affected reactions on the significance of attributes and levels of trip satisfaction [11].
Light, (1996) in his study made a correlation between tourists\’ characteristics travelling to a heritage site in South Wales. In this study, tourists\’ expectations/perceptions were essential attributes identified with satisfaction with the destination and in boosting the odds of tourists to return.[12].
Rafat S., (2012) in studying the Factors That Influence Tourists’ Satisfaction shows that tourist satisfaction showed significant differences based on such controlling factors as travel behavior characteristics, demographic characteristics, cultural characteristics and information source [13].
After all these reviews, this study included demographic and travel behavioral characteristics of tourists as very necessary indicators as to examine the level of tourists satisfaction.
2.4. Tourists’ Expectation
There has been different studies on consumers’ expectation and some of which this part of the study reviewed. The term expectation has been defined by various authors in many ways. Richard, (2010) in his work “Satisfaction: A Behavioral Perspective on the Consumer” asserts that expectation is a prediction of the future results based on the past experience, current circumstances, or other sources of information [14].
Manente, (2008) – expectation takes place before the tour or visit. Tourists always picture in their minds their chosen destination and the likely benefits that they stand to gain from their future trip. This can normally be inspired from tourism advertisements, commercials, brochures, mass media and informal information, or word-of-mouth by friends and relatives [15].
In the case of Ireland, Jonathan and Dimitrios, (2011) observed that many first-time visitors had well prepared for their tour by getting some information in advance via the use of the internet. Numerous websites with virtual brochures are available for seekers to view idyllic scenery of Ireland. As a means of motivating tourist to travel destinations invest in creating unique and eye-catching attractions [16].
According to Teas (1994) expectation can be defined as performance of establishment, ideal performance or desired performance [17]. Regarding the relationship in the middle of expectation and satisfaction, expectation can be characterized as earlier estimations made by customers while been serviced Oliver (1981) [17].
It is generally accepted that tourists have expectations after making a destination choice for a holiday and that their satisfaction levels during and after their holiday period depend mostly on their expectations Jin et al (2006) [18].
2.5. Tourists’ Perception
Charlotte and Ritchie (2003) find that the overall impressions and feelings of the image of a destination may have an influence on tourists’ perception [19].
Reisinger and Turner (2003) assert that perception can be influenced by people’s personal characteristics, their interests, their experiences, value orientation and even their expectations [20].
Yeganeh, (2007) in his study shows that certain risks like health risks, dissatisfaction risks, financial risks and especially risks of losing one’s life during a trip can affect the travel decision. He gave an instance of the Luxor massacre in Egypt where 58 international tourists were killed by Islamic terrorism; this incident caused a decline in the tourism business which caused a lot of hard times and affecting a lot of those whose livelihood depended on the sector [21].
Anna & Stefan (2012), Perception has external and internal stimuli. External stimuli contain controlled, induced or targeted information such as advertisement. Internal stimuli take account of uncontrolled, naive or self-directed information on television, newspapers, authentic or prior experience, or by word- of-mouth. Uncontrolled information is usually considered being highly-remain and thus may have more impact on beliefs. Perception may not conceal and be acceptable if the information does not go through the current beliefs. In addition, internal stimuli with motives (push factors), needs (embodiment of the motive), want (expression of needs), and the benefits (expected results), act as a significant role in the tourists‟ perception. The element of personality, lifestyle, and attitudes may impact on how tourists feel pleasant, enjoyable, angry or surprised at a destination [22].
In the study of Haahti (1986) revealed that tourist perceptions (of 12 examined European countries) may impact by a wide range of different attributes, such as money, accessibility, sports facilities and other activities, nightlife and entertainment, peace and quietness, hospitality, wilderness, tracking and camping, cultural experience, scenery, change from the usual destinations. Tourists may have negative or positive perception of these same values in different destinations [23].
2.6. Tourists’ Satisfaction
Customer Satisfaction is very vital for any organization to continue to remain in business and the tourism industry is not excluded. Due to the importance of making sure customers are satisfied with what they consumer be it goods or services a lot of studies have been embarked by many researchers and this study will try to review most of which as a bit to gaining more insight.
Tribe and Snaith (1998) found out in their study that tourists’ satisfaction towards a destination is dependent on the extent of evaluation of the destination attributes that surpasses the expectation before the trip or tour. The HOLSAT model was used as a measuring tool – it measured the extent of tourists’ satisfaction by evaluating the relationship between their expectations before the holiday and their perceptions [24].
Reisinger and Turner (2003) argues that for consumers to be satisfied it means that the experiences they enjoyed should be more than what they expected but if the reverse is the case then tourists feels displeasured setting in dissatisfaction towards the trip[20]. In comparing satisfaction with attribution Valle and Wallendorf (1997) asserts that tourist satisfaction may be attributed either to the tourist themselves or to the environment and situation, these they classified to as internal attribution and external attribution respectively [20]. So it goes to say that those tourists who blame external factors do not easily get satisfied while those on internal factors mostly get satisfied.
As a result of intense studies on customer satisfaction, a lot of researchers have developed different theories and models for which satisfaction can be examined. In addition to the HOLSAT model mentioned earlier, we have some examples such as; Parasiraman, Zeithaml, and Berry’s (1985) expectation – perception gap model, Oliver’s expectancy – disconfirmation theory, Sirgy’s congruity model and a performance – model.
Pizam and Milman (1993) used Oliver\’s (1980) expectation – disconfirmation model to enhance the prescient force of travelers\’ satisfaction. They introduced the basic dynamic nature of the disconfirmation model into hospitality research, while testing part of the original model in a modified form. In order to assess the causal relationship between two different disconfirmation methods, they utilized a regression model with a single “met – expectation” measure as the dependent variable, and 21 diverse – score measures as the independent variables [25].
Pizam, Neumann and Reichel (1978) examined the variable structure of visitors\’ satisfaction with their various destinations. The authors could indicate eight recognizable measurements of visitor satisfaction [26].
Barsky and Labagh (1992) presented the expectancy – disconfirmation worldview into lodging research. Fundamentally, the proposed model in these research works was that satisfaction of customers was the function of disconfirmation, measured by nine “met expectations” components that were weighted by attribute – specific significance. The model was tried with information gathered from 100 arbitrary subjects by means of visitor comment cards. This study came about into a proof that satisfaction of customer was discovered to be associated with a customer\’s intentions to return [27].
2.7. Relationship Between Tourists’ Destination Attributes And Satisfaction
There is a need to investigate the relationship between destination attributes and tourists’ satisfaction from the tourist’s perspective in order to gain an indebt understanding of tourists’ attitudes and behavior after they visit destinations. Tourists express satisfaction or dissatisfaction after they buy tourism products and services[28]. In the event that visitors are satisfied by the items, then they will have the inspiration to purchase them again or they will prescribe them to their companions and friends.
Glasson (1994) gives an outline of the characteristics of guests to Oxford, their effects, and the management responses to date. In general, around 80% of tourists who visited this cultural/heritage destination were satisfied. Over 80% of the tourists who visited Oxford said that they would like to make a return visit. The tourists particularly enjoyed the architecture, which together with the traditions of the university and colleges creates an attractive physical environment and atmosphere. The shopping facilities were also well liked, and local people were regarded as friendly. However, in several areas, Oxford scored badly. These were crowds, traffic, and accessibility of restrooms, the city expensiveness, poor signage, and poor climate [29].
Light (1996) reported a contextual analysis of the attributes of guests to a unique occasion (for these situation historical reenactments) at a heritage site (Carephilly Castle) in South Wales. By contrasting the attributes of guests on occasion and non-occasion days, it was clear that the occasions had specific appeal to tourists and were effective in empowering repeat visits. In Light\’s research, most guests were satisfied by the destination. This satisfaction drives tourists to extend the length of stay and visit it again [12].
CHAPTER THREE
SATISFACTION MEASUREMENT TECHNIQUES
3.1. Introduction
The customers or consumers in any business must be treated as the king because every business always begins and ends with the customers. The image, profit, growth, status etc of the business organization depends mostly on the customers. Knowing how important customers are to the success or failure of any organization, it is then very critical that their satisfaction be given the first priority. Customer satisfaction is the measure of the level of meeting and exceeding of customers expectation.
In the world of business today and almost in every other thing in life there is an ever rising increase in competitiveness which has led to organizations that must remain in business to venture into ways on how to know if their clients are satisfied with their goods and services. Measuring satisfaction effectively is one of the hardest challenges faced by an organization this is due to the fact that measuring satisfaction is not a straight forward thing.
This chapter will be explaining some of the techniques involved in measuring customer satisfaction. These techniques are most times applied directly in the case surveys and interviews while some are done indirectly such as complaints and loyalty. The techniques are as follows;
3.2. Feedbacks
Feedbacks are combination of both positive and negative responses gathered from the customers. Feedbacks can help as guidance in any business organization decision-making process. It is very essential technique in measuring customer satisfaction basically among the current customers.
Customers’ feedbacks can be gotten through different avenues ranging from the use of feedback cards, via emails, letters, over the phone, the use of surveys and questionnaires etc. the use of surveys and questionnaires are the most widely acceptable technique in the business world today, where many questions are asked by the supplier to the consumer, which is prepared to certain weighted scale say from 1 – 5 and the data is later collected and analyzed to measure whatever the survey was aimed at.
3.3. Interviews
Interview is another technique used in measuring satisfaction; it is almost the same with feedbacks but with a major difference in benefit because interview creates a bounded relationship among the supplier and the consumer since it involves a face to face communication most times, though it can also happen over the phone or via a website. In addition interviews do not only focus on loyal customers but prospective and defector customers too. A major setback in using this technique is that it requires well trained personnel to be able to get valuable information from the customers.
In order to conduct a good and reliable survey either by using self-completed questionnaires, face-to-face interviews or by use of telephones, the following steps should be applied;
• the aim of the survey
The purpose of the survey is the first decision to be made before even conducting any survey. Here the type of information the survey is to collect is decided, the questions to be asked are also determined at this stage and a decision on the best way to gather this information is decided. All these are to be done early in this stage so as to avoid unnecessary time wastage, waste of energy and even collecting unwanted information.
• selection of participants
A clear and well defined sample selection should be decided on. This is very important because it actually can affect the authenticity of the entire survey. The sample needs to represent the participants the survey is targeting to reduce the occurrence of bias. There are three basic ways of selecting participants for surveys;
1. Random selection: this is a selection in which participants stand the same chance of being selected. It is often difficult to get a pure random sample; this is because lists of all targeted participants are not always readily available.
2. Systematic selection: this is a selection in which participants are selected according to well designed or though out pattern
3. Convenient selection: this is a selection in which participants are selected mainly due to how convenient and comfortable it is for the surveyor. Participants who can be easily reached are selected; this in turn creates more bias in the survey. It means the result of the survey may not reflect the views of the targeted participants.
• selection of survey type
The type of survey to be used determines how the survey is to be conducted; it determines the information to be collected and recorded. Whatever survey type chosen be it self-completed questionnaires, face-to-face interviews or telephone surveys they all depend mainly on the information to be gathered, the quantity of information to be analyzed, time and available resources. For instance in terms of time and resources available, the face-to-face interview survey type is more time consuming and expensive compared to the others while if using the self-completed questionnaire survey type the participants must be able to read and write properly.
• selection of sample size
Sample size has to do with the number of participants the survey targets to meet. It is very important to survey more people, as this will make more information available and the results will be much more accurate. However, in surveying more people, more energy, time and resources will be needed to conduct and analyze the survey. Therefore in choosing the sample size a lot of considerations on the available time, energy and resources must be made.
• conduct a pilot study
A pilot study is a trial or testing of the survey instrument that is the questionnaire or interview. This sort of test run is done to ensure that are no unexpected errors, it ensures that the information obtained can be analyzed and also it allows for validity and reliability testing.
A pilot study is to be carried out within a very small sample size; the information gathered from the pilot study is to be analyzed to check for inconsistencies, unnecessary or missing information and errors. These observations can be deleted and the final usable instrument is made after which a re-test of the edited instrument should be done.
• conduct the survey
This step is when the actual field work is done. It follows after the pilot study has been concluded. This time the researcher has adequate idea on how to go about the exercise from the experience gathered from the pilot study or trial phase. Distribution of questionnaires and retrievals are solely determined by the researcher. In the case of interviews, appropriate time, duration and place should be fixed mostly in favor of the respondents.
• analyzing the gathered information
This step is very necessary because information gathered will not mean anything or make any sense without proper analysis. Also it will be very important to ponder on the ways and means to analyze the data before even gathering them; gathering huge information will be useless and considered a waste of resources if it cannot be analyzed.
The type of question asked determines the type of analytic approach to be used. For instance when analyzing closed-ended questions; quantitative approach should be used. The use of frequencies and percentages are some of the basic techniques for this approach. But for open-ended questions; qualitative approach is the way to go; this time around the use of percentages becomes impossible but the responses gotten from open ended questions can be categorized and interpreted in frequencies and trends.
Data analysis could be done by hand or both quantitative and qualitative approaches if the sample size is considerably simple and small but when the sample size is large and more complex then the use of computer programs will be helpful. Some of the computer programs that could be used to analyze data include SPSS, Microsoft Excel and Microsoft Access.
• result interpretation
After the previous step of analyzing the gathered information follows the interpretation of the analysis. As much as possible data interpretation should reflect what the whole exercise is all about.
• report writing
This is the final step to carrying a survey; this step comes before the actual implementation of the outcome of the survey in real world. A survey is not complete without proper report or documentation. It does not only represent a proof that the survey was carried out, it serves as a reference material in the future.
A formal survey report follows this pattern;
• Abstract: shows a summary of the major highlights of the survey
• Introduction: shows the aims and objectives of the survey, gives some background information gotten from some relevant literatures reviewed.
• Method: shows the detailed steps and procedures employed, explains the how the manner in which respondents were selected, the quantity of survey tools used in the research.
• Results: shows the relevant facts, the outcomes and data gotten after analysis.
• Discussions: shows the interpretation of the results. Here the empirical results are explained to reflect what they actually mean in real life application
• Conclusion: shows a detailed summary of the entire research especially the findings, results and discussions.
• Recommendations: shows relevant suggestions for future plans and actions.
• References: shows ordered lists of research literature materials reviewed in the course of the research work.
• Appendices: shows extra information that maybe was too bogus to be included in the main work. It usually comes in last pages of the report.
3.4. Customer Loyalty
Customer loyalty shows customer satisfaction level. If a customer is very satisfied and revisits regularly then it is said that the customer is loyal. When using loyalty as means to measure customer’s satisfaction it is more beneficial to measure the behavior of the customer than the intention [30]. The supplier must communicate effectively with the customer as to create a good relationship with the customers. The customer loyalty index is obtained as a tool in measuring customer satisfaction.
A concept known as Net Promotion Score (NPS) is one of the most used tools in measuring loyalty. It measures the possibility of a customer referring an organization to his/her friends, relatives or someone else. The customer in this case is asked if he/she would make recommendations about your business on a scale of 1 to 10. The collection of these data will be used to ascertain how satisfied your customers are [31].
3.5. Customers’ complaints
Customers’ complaints are the issues and problems which are reported to the organization or supplier with focus a specific product or service. In using these complaints as tool to measure customers’ satisfaction a classification is made to ascertain seriousness of the complaints. If it takes a longer period of time for the complaints to go away then it shows that d organization is lacking in performance but if the complaints does not persist then it means it is performing well and customer satisfaction level is considerably higher also.
CHAPTER FOUR
GENERAL OVERVIEW OF NORTH CYPRUS TOURISM INDUSTRY
4.1. Introduction
North Cyprus which is officially known as Turkish Republic of North Cyprus (TRNC) is a self declared state that consists of the northeastern part of Cyprus. It is recognized only by Turkey. A buffer zone controlled by the United Nations extends between Northern Cyprus and the Republic of Cyprus and isolates Nicosia, which happens to be the capital and the biggest city of both nations.
In 1974, a coup d’etat was plotted trying to attach the island to Greece, which prompted the Turkish attack of Cyprus. The greater part of the north\’s Greek Cypriot populace was removed and Turkish Cypriots traveled toward the north as a consequence of this, and the isolating of the island, prompting an unilateral independence declaration by the North in 1983. Northern Cyprus is vigorously reliant on Turkey for monetary, political and military backing because of its absence of recognition [32] [33].
Northern Cyprus is a semi-presidential, democratic republic with Turkish as its official language and a distinct local dialect being spoken. The Sunmi Muslims make up the huge majority of the population, while religious attitudes are moderate and secular. Northern Cyprus with an area of 3,355 square miles is around a third of the entire island. It borders with Turkey in the north and Syria in the east. It lies between latitudes 34° and 36° north and longitudes 32° and 35° east.
It is partitioned into five districts which are; Lefkosa, Gazimagusa, Girne, Guzelyurt and Iskele (see Figure 1). These districts are divided further into twelve sub-districts and a total number of twenty-eight municipalities.
The coastline of Northern Cyprus highlights two bays: one is the Morphou Bay and the second one is the Famagusta Bay, the island has four capes to be specific; Cape Apostolos Andreas (which is the endpoint of the Karpaz Peninsula) Cape Zeytin Cape Kormakitis and Cape Kasa.
Figure 1: Map of North Cyprus showing the 6 District
Source: Google images (2015) [34]
The narrow Kyrenia mountain range lies along the northern coastline, and the highest point in Northern Cyprus, Mount Selvili, lies in this mountain range with an altitude of 1,024 metres (3,360ft). The Mesaoria plain reaching out from the Güzelyurt district toward the eastern coastline is another characterizing scene. The plain consist of plain fields and hills and several seasonal streams which crosses them [35].
4.2. North Cyprus Economy
Northern Cyprus has an economy that is dominated by the services sector such as the public sector, tourism, education and trade. Though Northern Cyprus is heavily dependent on turkey for economic support due to the internationally unrecognized status, it is said to be the top country in Europe in entrepreneurial intent to begin a fresh business in 2014[36]. The economy is based on a free market approach [37].
The official currency in the TRNC is Turkish Lira (TL). Individuals and corporate bodies are not prohibited from keeping and saving foreign currency, they are free to use foreign currency as a means of foreign exchange and to express in foreign currency figures appearing on payment orders and contracts. The official exchange rates are fixed day by day by the Central Bank and reported. Banks, foreign exchange bureaus and the Central Bank are allowed to fix different exchange rates for the buy and offer of foreign currency. There is a developed banking system in the TRNC. Apart from the Central Bank and the Development Bank there are 24 onshore commercial banks and 14 offshore banks. Banks are allowed to keep foreign currency, go about as mediator in import and export exchanges, acknowledge outside cash funds, take part in buy and offer of foreign currency, bargain in securities required to be paid in foreign currency, give out loans in foreign currency, draw in effectively in cash and remote cash markets and in consistence with global managing an account utilization, to bargain in each sort of foreign currency exchanges.
Concerning the foreign exchange, Turkey stays, by a wide margin, the principle exchanging accomplice of North Cyprus, Turkey is in charge of around 60% of importations to North Cyprus and more than 40% of its exports. In a milestone case, the European Court of Equity (ECJ) ruled on July 5, 1994 against the English routine of importing produce from the territory in light of certificates of origin and phyto-sanitary certificates conceded by the authorities of TRNC. The ECJ decision expressed that just products bearing certificates of origin from the \’\’Government of Cyprus\’ could be allowed for exchange by EU countries. The ECJ standpoint brought about a significant lessening of Turkish-Cypriot exports to the EU – from US$36.4 million (or 66.7% of aggregate Turkish-Cypriot exports) in 1993 to US$13.8 million in 2003 (or 28% of aggregate exports). Indeed, even along these lines, the EU keeps on being the second-biggest exchanging accomplice of North Cyprus, with a 25% offer of aggregate imports and 28% offer of aggregate exports. All out imports expanded to US$853.1 million in 2004 (from US$477.7 million in 2003), while downright exports expanded to US$61.5 million (from US$50.6 million in 2003). Imports from the U.S. come to US$7.1 million in 2004, while exports to the U.S. were not exactly US$10,000[38].
4.2.1. Gross Domestic Product Growth
Despite the conditions imposed by the lack of international recognition, the nominal Gross Domestic Product (GDP) growth rates of the economy in 2001 to 2005 were 5.4%, 6.9%, 11.4%, 15.4% and 10.6% respectively[39]. The relative solidness of the Turkish Lira and a boom in the education and construction sectors has affected incredibly on the growth rate of the real Gross domestic product. It was estimated in 2007 at a rate of 2%. The growth has continued through the 2010s, with the real growth rates of 3.7%, 3.9%, 1.8% and 1.1% respectively in 2010 to 2013(see Table 1) [40].
Table 1: Real Growth rate
SECTORS 2009 2010 2011 2012 2013
Agriculture 8.2 10.0 10.8 3.7 -1.6
Industry -9.1 -0.2 3.4 -0.7 1.7
Construction -18.5 3.8 3.3 -16.0 -0.3
Trade-tourism -8.7 18.3 6.0 6.1 1.4
Transport-communication -2.8 -20.0 -4.3 5.7 2.0
Financial institutions 1.7 0.3 1.4 8.1 7.5
Ownership of dwellings 3.8 4.0 3.9 3.7 3.2
Business and personal services 3.4 -5.3 4.3 1.5 2.3
Public services -5.0 0.4 2.8 1.9 1.4
Import duties -7.1 18.6 3.9 8.9 -2.1
11. GDP -5.5 3.7 3.9 1.8 1.1
12. Net factor income from abroad -28.1 -9.9 27.1 -174.5 35.3
GNP -5.7 3.6 4.0 0.5 1.3
Source: state planning organization (2015) [40]
The trade – tourism and the public services sectors of the economy being the highest contributors to the growth experienced with 20.1% and 17.7% rate respectively. Also there has been a steady increase in the current price of the GDP which are from 5,079,907,679.4 TL as at 2008 to 7,606,898,636.2 TL in 2013.
4.2.2. Gross National Product Growth
Gross National Product (GNP) is the business sector estimation (market value) of all goods and services made in one year by work and property supplied by the country\’s residents. Not at all like Gross Domestic Product (GDP) that characterizes production based on the particular geographical area where the production was made. GNP allocates production in light of proprietorship (ownership).
Just like we have seen the steady growth in the GDP so also it has been the GNP. The growth rate is not only traceable to the stability of the Turkish Lira like explained earlier but the growth was further buoyed by the immerse investment made by foreigners from North Europe in buying and investing in holiday villas. In 2003 to 2007 it was estimated that over One Billion Dollars was generated from over 10,000 foreigners who made investments in buying of holiday villas where some lived in permanently or come to stay during the summer months.
There was a tripling of the GNP per capita between the years 2002 to the year 2007; that is 4,409USD in 2002, 5,949USD in 2003, 8,095USD in 2004, 10,567USD in 2005, 11,837USD in 2006 and 14,047USD in 2007. This steady increase was maintained up till 2008 with a figure of 16,158USD but after on it dropped drastically in 2009, later on picked up once again steadily from 2010 all through to 2013 (see Table 2). The figure below shows a steady increase in the current price of the GNP which was 5,128,334,134.4TL as at in 2008 to 7,579,403,276.2TL in 2013[41].
Table 2: Sectoral Developments in Gross National Product
(Current Prices TL)
SECTORS 2008 2009 2010 2011 2012 2013
1.Agriculture 259,154,100.9 300,616,430.7 330,292,725.0 366,385,942.1 386,521,999.6 404,964,639.3
2.Industry 542,766,477.9 516,727,436.0 552,836,167.3 558,480,243.8 587,060,602.7 636,625,615.7
3.Construction 362,216,034.6 346,383,111.8 312,118,707.4 408,495,970.9 335,779,569.4 370,660,075.0
4.Trade-tourism 721,709,047.4 766,293,097.7 900,033,653.9 1,216,786,131.2 1,385,288,666.6 1,527,899,266.0
5.Transport-communication 614,527,377.1 597,293,097.7 525,213,182.4 553,109,188.9 642,862,532.9 711,369,494.0
6.Financial institutions 357,835,272.5 388,421,732.4 404,370,969.7 472,603,396.4 506,016,653.5 579,666,453.3
7.Ownership of dwellings 175,938,464.6 202,491,732.4 220,581,154.0 274,371,576.8 305,768,610.1 358,244,276.0
8.Business and personal services 525,208,660.7 609,293,196.4 652,370,969.7 727,498,986.3 801,773,079.2 891,643,479.0
9.Public services 1,103,967,143.1 1,201,228,086.4 1,180,064,551.9 1,294,282,251.1 1,294,895,632.5 1,349,944,886.1
10.Import duties 416,585,101.4 447,601,464.0 536,308,506.4 636,982,661.1 709,117,362.8 775,880,451.7
11.GDP 5,079,907,679.4 5,376318878.0 5,614,136,886.0 6,508,996,348.7 6,955,084,709.3 7,606,898,636.2
12.Net factor income from abroad 48,426,455.0 38,961,820.8 35,398,050.0 50,178,180.0 -39,253,080.0 -27,495,360.0
GNP 5,128,334,134.4 5,415,280,698.8 5,649,534,936.0 6,559,174,528.7 6,915,831,629.3 7,579,403,276.2
GNP Per Capita ($) 16,158 13,930 14,703 15,404 15,308 15,302
Source: State Planning Organization (2015)[41]
4.3. North Cyprus Tourism Industry
Tourism continues to be one of the major players in the economic development of the Turkish Republic of Northern Cyprus; it is in fact a priority and very crucial sector in the economy of the TRNC.
For the year 2013, there was a 6.34% increase in employment, with a total number of 12,817 persons employed in different establishments in the tourism sector [42]. The tourism sector which is made up of the different other establishments such as accommodation establishments, travel agencies, casinos and restaurants are responsible for this employment increase with the tourist accommodation establishments and the casinos having the major number of employees with 5,369 and 4,083 respectively[42]. Below is a table showing the number of these establishments and the number of employees for 2013;
Table 3: Number of employees in tourism sector (2013)
TYPES OF ESTABLISHMENT NO. OF ESTABLISHMENTS
NO. OF EMPLOYEES
Tourist Accommodation Est.
130
5,360
Other Accommodation Est.
15
92
Tourism and Travel Agencies
151
453
Casinos
25
4,083
Tourist Restaurants
585
2,820
Total
906
12,817
Source: Tourism Planning Department (2015) [42]
Also During this same year the sector contributed to the Gross Domestic Product (GDP) by 20.1% [43] and the tourism earnings comprised a huge portion (1,527,899,266.0 Turkish Lira) of the total Gross National Product earnings for the same year.
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