Economic transformation in the Czech Republic—a qualified success

Abstract

The post-1989 economic transformation in the Czech Republic has created a market economy acceptable for EU membership but measures of international competitiveness show it to be some way behind the most advanced countries. Features of the transformation strategy in banking, the development of small businesses and privatisation created an economy with limited potential for autonomous, innovative growth. Policy shifted in the late 1990s towards supporting inward investment. Some of this is associated with low skill levels and minimal innovation. The motor vehicle sector is the most promising, but the strategies of multinational companies may create barriers to matching the productivity levels of advanced countries.

Notes

¹WEF (World Economic Forum), Global Competitiveness Report 2005 – 06, 2006, available at: www.weforum.org, accessed 1 January 2007.

²WEF (World Economic Forum), Global Competitiveness Report 2005 – 06, 2006, p. xviii, available at: www.weforum.org, accessed 1 January 2007.

³Transparency International, Annual Report 2004, 2004, p. 8, available at: www.transparency.org, accessed 1 January 2007.

⁴ČNB (Czech National Bank), Initial Capital, Capital Adequacy and Classified Credits as of 31 December 1997, 1998, available at: www.cnb.cz, accessed 1 January 2007.

⁵ČNB (Czech National Bank), Basic Indicators of the Banking Sector, 2006, available at: www.cnb.cz, 1 January 2007.

⁶Calculated from MF (Ministry of Finance of the Czech Republic), Macroeconomic Forecast (Prague), 2006, Table 8.2, available at: www.mfcr.cz, accessed 1 January 2007.

⁷Calculated from PSE (Prague Stock Exchange), Ročenka 2005, 2006, p. 37, available at: www.pse.cz, 1 January 2007.

⁸M. Zeman, Hospodářské noviny, 27 February 1992.

⁹Also available at: http://cesko.ihned.cz/1-10071860-17996370-002002_d-69, accessed 1 January 2007.

¹⁰See www.conti-online.com, accessed 1 January 2007.

¹¹See http://www.skoda.cz, accessed 1 January 2007.

¹²Calculated from CzechInvest, Investment Incentives: Manufacturing (Prague), 2006, available at: www.czechinvest.org, accessed 1 January 2007; and ČNB (Czech National Bank), Přímé zahraniční investice za rok 2004, 2006, p. 19, available at: www.cnb.cz, accessed 1 January 2007.

¹³ Hospodářské noviny, 14 April 2006.

Additional information

Notes on contributors

Martin Myant

The author would like to acknowledge helpful comments and advice on an earlier draft from Martin Srholec of the Centre for Technology, Innovation and Culture, University of Oslo.