By Alexander Apostolides on August 26, 2009

The need for a tourism consumer price index?

I was reading the Independent today when i was struck with the recommended prices for the newspaper outside the UK.
Cyprus 4.20 Euro
Greece 3.5 Euro
Austria 3 Euro
Germany 3 Euro
Italy 3 Euro
Luxembourg 3 Euro
Spain 3 Euro
Malta 2.95 Euro

Now if one ranks these countries in terms of how rich is the average citizen (i.e. per capita GNP in purchasing power parity terms) the ranking is vastly different. With the EU-27 as 100 the richest per capita countries are:

Luxembourg 252.8
Austria 123
Germany 116
Spain 103.9
Italy 100.5
Greece 95.3
Cyprus 94.6
Malta 76.4

I think this shows that the implicit feeling in Cyprus is a very expensive tourist destination can be seen by such articles such as a foreign newspaper. Many tourist oriented products that are not included in the basket of products that is used to estimate the consumer price index. Yet prices of tourist friendly products in Cyprus are prices in complete disregard of income or transport costs. And once again this implicitly shows that Malta is doing something right when it comes to tourism - cost does not come up as worry nearly as much in tourist surveys as it does in the case of Cyprus.

By Alexander Apostolides on August 19, 2009

Another poor but nessesary descision?

Another bad decision by the government in terms of economics. Phileleitheros reports today that the government is suspending all major investment works until after the crisis. This is undoubtedly due to the fact that the projection for GDP this year will be negative.

The problem is that at a time that the revenues from tax are shrinking and the expenditure on unemployment benefits is rising, the government deficit needs to remain within 3% of GDP. Thus when GDP is shrinking the government is in trouble even if it does not increase expenditure in the economy. This will put into trouble with the European central bank, with the possibility of a huge fine.

However the problem is that recessions are exactly the time when large infrastructure project should take place. The construction industry is alleviated from its crisis by government funding, while the government can get a good price because of the distress of the building companies.
Large investment projects also help the country move out of recession since investment is the basis of continued economic growth. It is true that Cyprus has investment bottlenecks that can only be solved by the government: the harbour is in a dreadful condition with outdated technology, and the ICT depth of the government bureaucracy is woeful. Stopping such projects in order to stay within the Maastrict limits not only prevent a faster recovery but also compromises economic growth in the future.

By Alexander Apostolides on August 13, 2009

Phileleutheros Today

Phileleutheros has a article to today "Ανάπτυξη με ρυθμούς του... 1970" arguing that the GDP might well be negative. The funny thing that the average annual growth rate of the decade was 3.5% per cent, a very respectable considering that the invasion eliminated more than forty per cent of GDP. It was Europe and Greece in particular who had slow growth during the 1970s. It would not have hurt Phileleutheros if they did their research before re-publishing titles used in Greece.

By Alexander Apostolides on August 11, 2009

Interesting History – How the victory of the Fascists in the Spanish civil war saved Cyprus from invasion during the Second World War.

On 17th of July, 1936 the nationalist generals attempted to wrest control from the democratic socialist government in Spain. The result was one of the bloodiest civil wars in modern Europe, seen by many as a proxy war to the sides that would eventually fight in the Second World War. The war dragged on until the 1st of April in 1939, after much bloodshed. The reprisals of the Franco against its former enemies were awful, representing some of the most notorious crimes against humanity. As a result of the war Spain was ruled by the iron hand of dictatorship until 1975, and only became a democracy in 1978; it is noteworthy to see how far Spain managed to progress in economic, artistic and cultural spheres after decades of repression and state sponsored violence.

The nationalist side took an increasingly fascist ideology during the war. This was partly because of the increasing power of the falangist movement within the ranks of the nationalist army but mostly due to the fact that the generals were aided (in terms of men, materiel, tanks and air force) by Hitler and Mussolini, making a mockery of international agreements that prevented military aid to the combatants. Without the aid the generals attempt to wrest control from the government would have surely failed. However the aid came at a price: companies such as HISMA, ROWAK and SOFINDUS plundered Spain for raw materials both before and during the Second War World. Spain had to provide ore at bargain prices during the duration of the Second World War.

In the words of the historian Charles E. Harvey the Nazi regime of Germany was desperately trying to achieve autarky in raw materials, in order to be able to wage a sustained military campaign without facing the shortages of raw materials faced in the First World War. Out of most raw materials, Germany could not be self sufficient in four key materials: Oil, iron, copper, and sulphur (used in explosives production), as Germany simply did not have these elements in its territory.

Spain delivered over 9.4% of iron ore, 50% of copper pyrites and 85% of sulphur prior to the civil war, and the establishment of a friendly regime ensured that the supplies of these crucial raw materials would continue until well after d-day in 1944.

This undoubtedly saved Cyprus in 1941. With the start of the Spanish civil war, Spanish supplies to German chemical producers and smelters was halted; Cyprus, with the energetic American company, the Cyprus Mining Corporation at the forefront, filled the gap. The amounts of ore sent to Germany were tremendous, with up to 80% of all ore being sent to maintain Hitler’s drive to re-arm. Thus the copper sulfate ore from Cyprus ensured that the German re-militarization could continue at breakneck speed.

The invasion of Crete in May 1941 a costly success for Hitler. Since Germany could not control the seas, but controlled the skies in the Agean. Hitler launched the largest airdrop operation to that date; although the Germans took control of Crete, Hitler saw his crack paratroopers decimated. This put him off plans to invade Cyprus and Malta by air.

However if the Spanish civil war was won by the republicans, the situation might have been different. An invasion of Cyprus in order to gain crucial deposits iron, copper and sulfur ore might have been more tempting that an invasion of a militarized and victorious republican Spain. It was not unusual for Germany to invade territories for its resources: Polesti in Romania was occupied by the Germans to secure their oil supply, while vital manpower was diverted away from the attempt to capture Moscow in an attempt to wrest control of the oil and ore producing are of Baku in the Soviet Union.

For me this example shows that the history of one country can have a profound effect on the history of another, and that history can be taught to be a interesting and dynamic subject. It also emphasises how economics and politics can interact, and highlight the importance in understanding the economic motives of political actions.

By Alexander Apostolides on August 10, 2009

NY TIMES OP-ed misses the point about GDP.

Every two years there is somebody who claims the death of GDP as a tool in understanding wellbeing and measuring performance. Now even the New York Times has joined the band wagon.

As a person who has spent the last 4 year reconstructing the GDP I can tell you that a lot of what this article is saying is bull. One of the biggest criticisms is that DIY and household work is not included in the GDP. Yet that is a political decision and a decision of national accountants: household chores can be included if politicians agree that it is a worthwhile activity and Sweden has already included it in its GDP (and i agree with Sweden).

The author goes on and moans that drying your clothes does not increase GDP, while taking it to the dry cleaners increases output - failing to see that the difference is that in the first case there no increase in income, while in the other someone gets paid for the services thus creating a multiplier effect that makes the income of the country just a tiny bit better off.

The author then goes on to argue that an increase in GDP does nessesarily make people better off and argues the aftermath of Katerina shows that. That is simply a misunderstanding of GDP- since the income of individual in based how the income is divided among the people. Thus in the US case GDP has been rising but only the income of the top 1% has been rising due to increasing income inequality and the lack of redistribution of income by the government.

Basically the author is annoyed that despite prediction of a recovery, the GDP data showed a continuing downturn. People forget that long recessions (or day i say it depressions) are not an up / down process - there a is lot weak recovery and sudden reversals. The author also does not tell us that there are alternatives to GDP, such as the Human development index, that take a persons welfare into account - the author does not mention them since they show the problems of the USA, which falls from first to the 20th country in the world when education and life expectancy is added to the income per capita indicator.

New instruments such using advanced econometrical analysis that are capable in identifying weaknesses in the economy much more quickly are needed, but that is not what the author is demanding. Sadly I expected more from the NY times in terms of leading the global discussion about the need to change economic thought.

By Pandelis on August 04, 2009

The Prospects for the development of Health Tourism in Cyprus

Health Tourism is an ever increasing international trend, which only a few countries have fully exploited. The island nation of Cyprus has many advantages that may establish it as a preferred health tourism destination. This article gives a bird’s eye view of these advantages and potentials, along with the main steps that need to be taken for the further development of this particular industry in the island of Venus. A special reference is given to the related means provided by the Internet and especially to the Health Tourism Portal, a site created for the development of the Health Tourism Domain in Cyprus. This portal consists a powerful marketing and networking tool for the health tourism stakeholders, providing them the opportunity for effective promotion, locally and abroad.
Health Tourism: a Global Trend
Health tourism (also called medical travel or global healthcare) is the term coined by travel agencies and the mass media to describe the rapidly-growing practice of traveling across international borders to obtain health-related services. Such services include common procedures, as well as complex specialized operations, such as joint replacement, cardiac surgery and cosmetic surgeries.
The number of people traveling abroad in order to receive this kind of services is rapidly increasing and there are several reasons behind this trend. The most important of them are that prices at the health tourism destinations are better than at home, treatment can be received more promptly, facilities are more advanced and more alternative treatments are provided. Health tourism in its wider sense includes sports tourism and the wellness and fitness tourism. Actually, every type of health care is included in the term, psychiatry, alternative treatments, culinary tourism, accessible tourism and assisted living abroad, to name a few.
In some publications[1] is stated that health tourism has been recognized by over 100 countries as a national industry. However, it seems that it has not reached its full potential of development and this is partly due to the insufficient use of modern technology and particularly the internet. An additional problem that health tourism has to face is that the related measures of quality vary across the world and the comparison between countries is not an easy task.
The Prospects of Cyprus
The eastern Mediterranean island of Cyprus is among the world’s best-loved holiday and retirement destinations. The reasons for that extend way beyond the mere look at the island’s climatic charts. Easily capable of meeting the demands of today’s tourists, Cyprus is also one of the countries leading the drive to open up medical tourism to a wider audience.
The standard of health in Cyprus is considered to be very high and the Cyprus medical system is compared very favorably with that of other developed countries. This quality may be expressed by various health indicators, such as the infant mortality rate (which stands at 3.1 per 1.000 live births), the expectation of life at birth (77.0 years for males and 81.7 for females) and the number of persons per doctor, which stands at 395[2]. In addition, the doctors, nurses and technical medical staff of Cyprus health establishments have been trained in many EU countries and the USA. It follows that Cyprus has a very high potential in establishing itself as a preferred medical tourism destination.
A particular health tourism sector with high potentials for development in Cyprus is Wellness and Fitness Tourism, i.e. the supply of services oriented to people seeking optimal health and well being. The purpose is to achieve body, mind and spirit integration, in order each individual to live more fully within the human and natural community.
Wellness and fitness tourism makes the perfect complement to Medical Tourism and Cyprus boasts an extensive range of health and wellness spas, offering a broad range of traditional and alternative services. There are countless treatments available to soothe, rejuvenate and inspire. Thalassotherapy, traditional baths and hamams, beauty treatments and aromatherapy, hot stone massage and hydrotherapy are only a few of them. For physiotherapy and rehabilitation, a vast selection of modern and extensive sports facilities and gyms are available.
Another advantage that Cyprus possesses in the area of health tourism is the combination of medical treatment with leisure, making traveling for health purposes more attractive than simply receiving healthcare at home. Some local businesses and providers have already started pursuing the development of health tourism in Cyprus, particularly in the area of medical care and wellness and fitness. The first results seem very encouraging, since Cyprus has already earned itself an exceptional reputation as a leading international centre of clinical excellence, providing first-rate services at very competitive prices.
However, very few of the health-related enterprises and organizations have considered effective international promotion, this mostly attributed to the lack of effectual advertisement abroad, despite the available opportunities given by modern technology and in particular by the Internet.
Further Development of Health Tourism in Cyprus
Given the number of industries and sectors involved, the development of health tourism in Cyprus requires that the engaged firms, bodies and organizations (the stakeholders) must orchestrate and unify their efforts towards a single direction. In other words, the health tourism domain must integrate in order to be fully developed. Such a great accomplishment will not take place, without taking advantage the infinite potentials of communication, especially the Internet.
For that particular reason the Health Tourism Portal ( has been recently launched, a site which provides all the opportunities for the unification and effective promotion of Health Tourism in Cyprus. This portal may complement the efforts towards the development of health tourism in Cyprus, through organized advertisement, extension and promotion abroad. Thus it may provide a boost for this initiative, along with a fresh momentum and encouragement for further development.
The Health Tourism Portal was created for three primary reasons:
a) To facilitate the communication between the firms and bodies engaged in health tourism (the stakeholders) and unite them into an integrated industry, through active cooperation and exchange of knowledge, ideas and methodologies.
b) To promote and advertise the unique and differentiated services that Cyprus enterprises and bodies have to offer in the area of the health tourism.
c) To give the opportunity to every person, firm or organization outside Cyprus to have a uniform and precise concept of the merits and potentials of Cyprus in the particular field. In that manner, Cyprus will come to the full attention of health and medical tourism facilators, such as health tourism agents and brokers.
Health tourism is a wide industry and many benefits may be retrieved from the better collaboration of the engaged parties, as described above. On the contrary the lack of communication may result in inefficiency and lack of competitiveness in the sector. An increase to the degree of awareness may be realized via the participation of the engaged stakeholders into WebPages designed for that particular purpose, such as the Health Tourism Portal.
In addition to the above, the continuous interaction and communication of the health tourism stakeholders may result in additional opportunities for gainful investments and the participation to local and international networks. The benefits from such engagements are far from ignorable, since they include: a) lower promotion and advertisement costs, b) quick and easy access to new ideas and technologies, c) reduction of the capital requirements, d) more effective use of infrastructure, e) reduction of the risks involved in developing new services, f) increased effectiveness and efficiency and g) reinforcement of competitiveness of the entire sector.
One of the many services that the Health Tourism Portal provides to its members is the Forum, designed to be a discussion medium for the members who wish to establish an organization to promote the health tourism establishments in Cyprus. The Health Tourism Portal Forum provides a channel for creative discussion and exchange of knowledge, ideas and technology. Further on, given the many different health tourism services offered in Cyprus, it may create an environment of interaction, collaboration and formation of alliances between the health tourism stakeholders.
In that manner, the Health Tourism Portal Forum may act as a catalyst and motivator for the initiation of additional actions needed to deal with, one of them being the integration of the health tourism domain in Cyprus. The benefits from integrating the segments of health tourism into one domain are many. The most important of which them is that the actions concerned with the development of the health tourism sector will then be launched by an all-embracing legal entity, which may identify the common goals, marshal the stakeholders and ensure the sustainability of the entire domain.
Actions such as the ones facilitated by the Health Tourism Portal will put an end to the inefficiencies created by the relative fragmentation of health tourism in Cyprus and increase once and for all the effectiveness and international competitiveness of Cyprus in that area.
[1] Gahlinger P.M. (2008), The Medical Tourism Travel Guide: Your Complete Reference to Top-Quality, Low-Cost Dental, Cosmetic, Medical Care & Surgery Overseas, Sunrise River Press.
[2] Statistical Service of Cyprus (2008), Health and Hospital Statistics 2006, Printing Office of the Republic of Cyprus.

By Alexander Apostolides on August 03, 2009

So is he leaving or Staying: Marfin and the Central Bank of Cyprus

According to this report from Greece, Marfin Popular is staying after all. If you ask me the only person that came out worse out of that is the personal credibility of Mr. Vgenopoulos. It should seriously worry is if Mr. Vgenopoulos is the best we have to offer in Greek CEO's but thankfully they are better ones out there who do their job without getting into the spotlight for all the wrong reasons.