Economic growth or continuing stagnation? Estimating the GDP of Cyprus and Malta, 1921-1938

This thesis explores the macro-economic history of Cyprus and Malta in the inter-war period. It constructs the first detailed estimates of output at aggregate and sector levels, enabling the analysis of economic growth and the sector structure of the islands‟ economies. It evaluates their performance within the context of economic change on Europe‟s South Eastern periphery and, specifically, in light of the experience of British colonial rule. The thesis argues, first, that economic growth was slow in wider European comparison and as sluggish as in neighbouring countries. It was so despite the two islands' being far less exposed to the political upheavals of the First World War than most other economies in South Eastern Europe. Second, the proximate reasons for their comparatively weak growth performance differed: Cyprus experienced a prolonged agricultural crisis, but participated in the post-depression recovery through the growth in international demand for the output of its copper mining industry. Malta‟s growth was slower than Cyprus due to the combination of declining British military expenditure and the population increasing faster than previously. These differences notwithstanding, the islands were ultimately affected by common problems. Their small overall size had a negative effect on their performance as global protectionism increased and restricted export opportunities. In addition, the colonial governments remained committed to balanced budgets and non-intervention in the economy, limiting their ability to combat the effects of the great depression. As a result, the deteriorating economic situation increased the political tension between the islanders and the colonial governments. The reluctance to mount an effective policy response to the great depression acted as a catalyst to political polarization, leading to violence and the suspension of the islands‟ constitutions