19th October 2015

Competitiveness: Czech Republic 31st in WEF Global Competitiveness Report 2015-2016. Up six places, but competing for what? (updated)


On 30 September, the Global Economic Forum published their Global Competitiveness Report 2015-2016, looking at the competitiveness of 140 countries around the globe; Czech Republic being one of them. The Czech Republic ranked 31st, up six places compared with the 2014 report (but - up (only) two places compared with the 2007 results). According to the report, the Czech Republic is an innovation-driven economy, together with 37 other highly developed economies. The most problematic factors for doing business in the Czech Republic, according to the WEF 2015 Executive Opinion Survey, were Inefficient government bureaucracy, Corruption, Policy instability, or Complexity of tax regulation, among others.

"Interesting that we improved in two categories heavily reliant on opinion, and both reductions occurred in areas using hard data. Not a bad thing, necessarily, but something we should note. Sometimes opinion leads data because it is now and data comes from the past, and sometimes opinion is built on yesterday’s data," says Weston Stacey, Executive Director of the American Chamber of Commerce in the Czech Republic. Read AmCham commentary on the WEF Report in Czech and English and view also AmCham devised Prosperity Index analysis in Czech and English (attached bellow).

Find more details on individual scores for the Czech Republic in the attached table and view country details in the Report above. Click also on a commentary published on the ceskesouvislosti.cz server.

CTK informed about a conference on the perspectives of the automotive industry in the Czech Republic and Central Europe held in Brno on 21 October 2015. Traditional car producers face competition such as Tesla, as well as Apple or Google. Education, research and development in the Czech Republic will have to adapt to the trend, if the country's car producers want to respond in an adequate way, Martin Jahn, president of the Czech Automotive Industry Association said. The perspective is bright for (sub)suppliers. They have to help bear the costs of innovation, though, he added.

View a recent interview on DVTV with Tomáš Víšek of McKinsey. As part of the conference Czech Republic: The shape we’re in held on 20 October in Prague, Mr Víšek says: If we look at the past 20 years, majority of Eastern European countries have been growing faster than the Czech Republic (e.g. Estonia). Moreover, within the past 10 years, even Germany has been growing faster (measured as GDP to purchasing power parity ratio, meaning ‚how much we produce‘ to ‚how much we can buy for the money we get from what we produce‘)…Past 10 years have been a „lost decade“; productivity of labor does not grow due to decreasing quality of education in the country, falling inflows of capital; also, Czech banks do not borrow money. The Czech Republic does not grow and Czechs have high wages. Entrepreneurship has a negative connotation. Homework: 1. improve quality of institutional environment, 2. improve quality of education, 3. improve competitiveness of labor... Read the study.

According to a survey conducted by EY as part of their Entrepreneur of the Year project, six out of ten Czech entrepreneurs have had a chance to get an advantage for their business in exchange for a bribe. Four out of ten entrepreneurs were directly asked to give a bribe. Respondents felt that fight against corruption should be among top priorities of the Czech government in the next two years, www.ihned.cz writes. Read more. More details on that on Czech Television.

Bisnode advisory informed in their article that at the end of Q3 2015, the number of Czech companies whose owner has his/her residence registered in a tax haven grew to 13,421.

Also, the ceskesouvislosti.cz server published an article focusing on the reasons why the Czech Republic will not use all EU money allocated for the country.

The Bloomberg innovation index, assessing performance of countries in six areas (R&D, Manufacturing, High-Tech companies, Postsecondary education, Research Personnel and Patents), aims at measuring innovation at the national level. The Czech Republic ranks 31st, lagging behind mostly in the area of high-tech companies (but the score is low due to the size of the country, authors admit). Read more.

Also, on 30 September, a conference The Czech Republic's Strategy for Competitiveness 2016: Industry for the 21st century took place at the University of Economics in Prague. In a topic-related interview for investicniweb.cz, Martin Srholec of IDEA think-tank at CERGE-EI said: "Czechs are capable of producing anything, in high quality and with low costs, if the idea is brought to them from abroad. It is not production or manufacturing in today's global economy, that generates wealth, though, but the capability of coming up with such ideas, i.e. creativity and innovativeness. And this is what Czech businesses lack...Read more. Click also here to read more quotes.

Earlier in September 2015 Deloitte Central Europe Top 500 analysis showed that among 500 largest companies in the CEE region (18 countries) there are 79 Czech companies (Škoda Auto being 3rd and ČEZ energy group 8th largest). More details in Czech are available here.

Recently, the Czech Government issued an Analysis of the state of research in the Czech Republic:  Strong science and scientists, weak connection to industry. Although R&D (public) expenditures are more or less comparable with those in other EU states, the country lags behind in the number of international patents or applied research results (the share is 11% of the total volume of results), for example.  A summary in Czech is available here.

Click on an interview on Czech research, development and innovations with Radek Špicar, director of the Czech branch of the Aspen Institute think-tank and vice-president of the Confederation of Industry and Trade of the Czech Republic, who says that the cooperation between universities and industry in the Czech Republic is at the lowest level among OECD countries. View also an interview with Pavel Hnát, expert at the University of Economics, on low investment into research and development. Hana Kejhová of the Modern Management magazine says in an interview for Radio Zet that the Czech Republic provides "hands and low qualified labor; knowledge and added value stays in countries such as Germany".

Read also WEF recent competitiveness-related reports issued in September Case for Trade and Competitiveness, Deep Shift: Technology Tipping Points and Societal Impact, and The Inclusive Growth and Development Report 2015.

Members of the American Chamber of Commerce in the Czech Republic