The private services sectors have been the main leverage of economic growth from a sectoral point of view during the last 15 years. This is explained by the comparative advantages of Cyprus in these sectors, which accrue mainly as a result of the well educated and, in comparison with other countries, low-paid labourforce, the relatively very satisfactory infrastructure in the area of transport and communication, and the favourable geographic position of the island. The most important private services sectors* are those of trade, hotels and restaurants, finance, insurance and business services and social and personal services.
Current trends in the services sectors suggest that Cyprus is well on the way to becoming a major international financial and business centre. A great number of offshore companies are registered in the island, many of them operating fully-staJ(fed offices. Offshorecompanies employedinl995about6.440 people, among them 2.170 locals, and generated a revenue of around C£160 m.
Two major international events in the mid-1970s assisted Cyprus' emergence as an offshore centre. These were the conflict in neigbouring Lebanon (and the eventual collapse of Beirut as the regional business centre), and the increase in the price of oil, which turned the Middle East into one of the wealthiest regions and fastest-growing markets in the world.
Established companies, operating from Beirut, and new companies entering the region, in their attempt to penetrate Middle Eastern markets, began seeking alternative locations from which to operate and Cyprus was an obvious choice. The first to arrive were large Lebanese companies whose owners were already familiar with the island. Others were guick to follow, as the island's reputation as a business centre grew. This reputation was based on solid foundations and, more specifically, on the comparative advantages mentioned above.
For instance, in the case of telecommunications the foundation of modern business activity - Cyprus offers excellent connection by all technical means to every corner of the world. Cyprus also provides businessmen with exceptional transport options. Its two international airports (Larnaca and Paphos) constitute an important air trafflc junction for the Middle East region. A great number of scheduled services to and from West and East Europe, Africa, the Middle East and the Gulf are operated each week by major international airlines, including the
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