[8] Northern Cyprus's economy operates on a free-market basis, with a significant portion of administration costs funded by Turkey.

Northern Cyprus uses the Turkish lira as its currency, which links its economic situation to the economy of Turkey.

[13][12][14] Because of its international status and the embargo on its ports, the TRNC is heavily dependent on Turkish military and economic support.

The Republic of Cyprus, as the internationally recognised authority, has declared airports and ports in the area not under its effective control, closed.

All UN and EU member countries respect the closure of those ports and airports according to the declaration of the Republic of Cyprus.

The Turkish community argues that the Republic of Cyprus has used its international standing to handicap economic relations between TRNC and the rest of the world.

[8] This growth has been buoyed by the relative stability of the Turkish Lira and a boom in the education and construction sectors.

The growth was further buoyed by the arrival of northern European home buyers, investing in holiday villas.

Over 10,000 British people, including expatriates, purchased holiday villas in Northern Cyprus to live in permanently, or to visit during the summer months.

Under a July 2006 agreement, Ankara is to provide Northern Cyprus with an economic aid in the amount of $1.3 billion over three years (2006–2008).