The major services are research and development , ICT and software development, nanotechnology and life sciences among others.
The Czech lands were among the first industrialized countries in continental Europe during the German Confederation era. The Czech industrial tradition dates back to the 19th century, when the Lands of the Bohemian Crown were the economic and industrial heartland of the Austrian Empire and later the Austrian side of Austria-Hungary. The Czechoslovak crown was introduced in April Introduced at a 1: The First Republic became one of the 10 most developed countries of the world behind the U. The consequences of the Munich Agreement and subsequent occupation were disastrous for the economy.
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After the occupation and forced subordination of the economy to German economic interests, the crown was officially pegged to the mark at a ratio of 1: In accordance with Stalin 's development policy of planned interdependence, all the economies of the socialist countries were tightly linked to that of the Soviet Union.
Czechoslovakia was the most prosperous country in the Eastern Bloc , however it continued to lag further behind the rest of the developed world. With the disintegration of the communist economic alliance in , Czech manufacturers lost their traditional markets among former communist countries in the east.
Economy of the Czech Republic
Today, this heritage is both an asset and a liability. The Czech Republic has a well-educated population and a well-developed infrastructure. The " Velvet Revolution " in , offered a chance for profound and sustained political and economic reform. Signs of economic resurgence began to appear in the wake of the shock therapy that the International Monetary Fund IMF labelled the " big bang " of January Two government priorities have been strict fiscal policies and creating a good climate for incoming investment in the republic.
In order to stimulate the economy and attract foreign partners, the government has revamped the legal and administrative structure governing investment. With the breakup of the Soviet Union, the country, till that point highly dependent on exports to the USSR, had to make a radical shift in economic outlook: This necessitated the restructuring of existing banking and telecommunications facilities, as well as adjusting commercial laws and practices to fit Western standards. Further minimizing reliance on a single major partner, successive Czech governments have welcomed U. Although foreign direct investment FDI runs in uneven cycles, with a Progress toward creating a stable investment climate was recognized when the Czech Republic became the first post-communist country to receive an investment-grade credit rating by international credit institutions.
Economy of the Czech Republic - Wikipedia
The country boasts a flourishing consumer production sector and has privatized most state-owned heavy industries through the voucher privatization system. Under the system, every citizen was given the opportunity to buy, for a moderate price, a book of vouchers that represents potential shares in any state-owned company.
The voucher holders could then invest their vouchers, increasing the capital base of the chosen company, and creating a nation of citizen share-holders. This is in contrast to Russian privatization, which consisted of sales of communal assets to private companies rather than share-transfer to citizens.
The effect of this policy has been dramatic. Now completed, [ citation needed ] the program has made Czechs, who own shares of each of the Czech companies, one of the highest per-capita share owners in the world. The country's economic transformation was far from complete. Political and financial crises in , shattered the Czech Republic's image as one of the most stable and prosperous of post-Communist states. Delays in enterprise restructuring and failure to develop a well-functioning capital market played major roles in Czech economic troubles, which culminated in a currency crisis in May.
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- Slovak Republic: Making Growth Inclusive, delivered at the University of Economics - OCDE.
The formerly pegged currency was forced into a floating system as investors sold their Korunas faster than the government could buy them. This followed a worldwide trend to divest from developing countries that year. Investors also worried the republic's economic transformation was far from complete. In response to the crisis, two austerity packages were introduced later in the spring called vernacularly "The Packages" , which cut government spending by 2. Growth dropped to 0.
The government established a restructuring agency in and launched a revitalization program — to spur the sale of firms to foreign companies. Key priorities included accelerating legislative convergence with EU norms, restructuring enterprises, and privatising banks and utilities. The economy, fueled by increased export growth and investment, was expected to recover by Growth in —05 was supported by exports to the EU, primarily to Germany, and a strong recovery of foreign and domestic investment.
Domestic demand is playing an ever more important role in underpinning growth as interest rates drop and the availability of credit cards and mortgages increases. Inflation is under control. If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
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