Cyprus under the Common Agricultural Policy: The Impact Effect

Abstract

Cyprus has recently applied for full membership of the European Community (EC). As a member of the Community, Cyprus will experience economic (political) costs and benefits. Examines the static costs and benefits for Cyprus′s national income from the application of the Common Agricultural Policy (CAP). The CAP will cause two types of income transfers between Cyprus and the rest of the EC: transfers through the Community′s budget; and direct income transfers from Cyprus′s consumers to the Community′s producers and vice versa in the form of higher prices. Using data for 1986 and 1987, demonstrates that Cyprus will have positive budgetary gains and net direct income transfers from Cypriot consumers to EC producers. The latter outweigh the former and the total outcome is a loss for Cyprus′s national income.