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The Czech Republic

The Czech Republic is situated in Central Europe and borders four countries: Germany in the west, Poland in the northeast, Slovakia in the southeast and the southern border is shared with Austria. The Czech Republic is a parliamentary republic with representative democracy and ranks among developed countries with strong economy and high living standards. On May 1st, 2004 it became a member of the European Union. The Czech Republic counts among technologically advanced countries, which are grounded in the ability to produce goods with a high added value.

SWOT Analysis


Strengths

  • reliability and overall stability of institutions, independence of courts
  • geographical location with an advantageous access to the most important markets
  • stable banking sector
  • stable price level
  • the central bank’s independence and credibility
  • high resistance to the “import” of inflation
  • high percentage of inhabitants with secondary education
  • relatively good quality of employment regulation
  • flexibility of wage policy
  • clearly arranged financial policy
  • high quality of research institutes
  • innovation capacity
  • relatively high credit rating
  • ability to attract foreign investment

Weaknesses

  • corruption and misuse of public funds
  • poor transparency in decision-making processes of the state administration
  • poor enforceability of public authorities’ responsibility
  • duration of legal proceedings and enforceability of law
  • insufficient diversification of power sources
  • insufficient cross-border link of transmission systems
  • low number and quality of limited-access highways
  • poor availability of high-speed Internet
  • low efficiency of the state administration management
  • strong dependence on export
  • low economic efficiency of the health care system
  • low percentage of inhabitants with a university degree
  • rapidly decreasing competencies of elementary school pupils
  • insufficient support of the job market in connection with further education
  • low age of voluntary retirement
  • lack of involvement of the elder generations in education
  • poor mobility of labour
  • low credit efficiency of the banking sector
  • unwillingness of banks to provide investment capital
  • insufficient market environment in the banking sector
  • support concentrated on basic research at the expense of applied research
  • inability to introduce new technologies without foreign capital
  • poor support of ICT in the public sector, insignificant online services of the public sector
  • insufficient diversification of industrial branches
  • procedural difficulties connected with entrepreneurship

Opportunities

  • realization of the project “eGovernment” computerization of public contracts
  • increase in the capacity and quality of universities (by means of introducing school fees) positive trends in the educational structure (increasing number of people with a university degree)
  • prerequisites for growth of educational mobility
  • motivation improvement for the elder generations to remain part of the job market
  • direct foreign investment in the ICT sector and transfer of technologies
  • further simplification and deeper interconnection of entrepreneurs’ administrative responsibilities
  • integration of capital markets in Central Europe
  • audit of claiming investment incentives

Threats

  • unbalanced state budget and rapid pace of the process of state indebtedness expensive and inefficient pension scheme, in connection with potential fiscal impact of the anticipated demographic development
  • low efficiency of the health care system burdening the public expenditures
  • poor interest in technological and natural science branches resulting in a lack of satisfaction of needs in prospective areas
  • high rate of foreign ownership of banking institutions
  • high energy demands of production
  • risk of transfer of investment projects abroad after the termination of tax advantages and other investment incentives

Source: Ministry of Industry and Trade of the Czech Republic