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Czech Republic - regional leader in business environment rankings for 2005 - 2009
( 09 / August / 2005 )
The Czech Republic is now the regional leader for the forecast period 2005 - 2009 in the Economist Intelligence Unit's business environment rankings. The country excels in the areas of political stability, policy towards foreign investment, foreign trade, financing and infrastructure. Accordingly well assessed are country policy towards private enterprise & competition or political effectiveness. For the details see the below table.
Business environment rankings
| Periods Criteria | Value of index (a) | Global rank (b) | Regional rank (c) | |||
| 2000-04 | 2005-09 | 2000-04 | 2005-09 | 2000-04 | 2005-09 | |
| Overall position | 6.72 | 7.45 | 29 | 24 | 2 | 1 |
| Political environment | 6.7 | 7.5 | 25 | 21 | 2 | 1 |
| Political stability | 8.2 | 8.7 | 16 | 15 | 1 | 1 |
| Political effectiveness | 5.5 | 6.6 | 29 | 26 | 3 | 2 |
| Macroeconomic environment | 6.6 | 8.3 | 47 | 38 | 7 | 6 |
| Market opportunities | 5.7 | 6.1 | 38 | 35 | 6 | 5 |
| Policy towards private enterprise & competition | 6.6 | 7.8 | 26 | 25 | 2 | 2 |
| Policy towards foreign investment | 8.9 | 8.9 | 6 | 10 | 1 | 1 |
| Foreign trade & exchange controls | 8.3 | 8.9 | 15 | 10 | 3 | 1 |
| Taxes | 4.8 | 5.6 | 46 | 46 | 4 | 7 |
| Financing | 6.6 | 7.4 | 28 | 28 | 2 | 1 |
| The labour market | 6.9 | 6.9 | 20 | 18 | 3 | 3 |
| Infrastructure | 6.0 | 7.1 | 27 | 26 | 1 | 1 |
(a) Out of 10 (10 is the best result). (b) Out of 60 countries. (c) Out of 10 countries: Azerbaijan, Bulgaria, Czech Republic, Hungary, Kazakhstan, Poland, Romania, Russia, Slovakia and Ukraine.
Business environment at a glance
* Policy towards private enterprise and competition
2005-06: Continued price deregulation.
2007-09: Stronger incentives for research and development (R&D) and the import of modern technologies. More emphasis on competition policy and export promotion.
* Policy towards foreign investment
2005-06: Incentives for large foreign investors, compatible with EU law, stay in place, with special incentives for high-technology investors.
2007-09: Compliance with EU regulations improves the business environment and sustains average annual foreign direct investment (FDI) inflows of over US$5bn.
* Foreign trade and exchange controls
2005-06: The Czech National Bank (CNB, the central bank) attempts occasional intervention to slow the rise of the currency. There is further harmonisation with the EU on trade regulations.
2007-09: The CNB brings the Czech currency into the EU's exchange-rate mechanism (ERM2) ahead of adoption of the euro.
* Taxes
2005-06: Cuts in corporate and other taxes. Widening tax base as the tax system is aligned with EU standards, although tax collection remains inefficient.
2007-09: Harmonisation of tax norms to EU benchmarks. Improved tax collection.
* Financing
2005-06: Domestic bond markets deepen as public debt expands.
2007-09: Strengthened supervision of the financial system. Improved liquidity of the capital markets.
* The labour market
2005-06: Productivity growth outstrips real wage growth. Inefficient labour market creates bottlenecks.
2007-09: Reduction of subsidies brings labour-shedding. Growth keeps unemployment from rising sharply.
Czechs spend an average of 2,000 hours at work per year, compared with the US average of 1,800. Labour productivity is growing faster than wages, and wage increases that are only moderate are likely to continue to restrain unit labour costs for the remainder of the forecast period.
* Infrastructure
2005-06: The Temelin nuclear power station enters into full operation. Motorway construction continues.
2007-09: EU funding boosts construction of roads, railways and telecommunications. Personal computer (PC) ownership and Internet penetration increase.
SOURCE: Country Forecast by the Economist Intelligence Unit