The five pillars of economic policy combine to create some general outcomes. The most common way to express that outcome is GDP per capita. That is loose way to track policy success. First, GDP is not created by government; it is created by natural resources and business. Second, GDP per capita is far too generic to give any meaningful assessment of the economy. Was the GDP created by natural resources concentrated in the hands of a few wealthy people? Was the GDP created by businesses which then shifted its profits into investments elsewhere? How much employee income did that GDP create, and how much savings for future investment exist?
We, therefore, have broken down GDP into elements more useful for assessing policy: labor force, household consumption, fixed capital, trade, and - since it will become more and more a part of policy creation - energy use.
As could be expected, the Czech Republic straddles the divide between Western Europe and former Soviet satellites. In 10 of 18 categories, the country is at a competitive disadvantage with the EU average. In four categories, it is competitive neutral, and in four it has a competitive advantage over the average EU country. The country‘s areas of strength indicate it has the potential for substantial competitive advances.
Strengths. The country's most prominent strength is in its productivity. Productivity is measured in many ways. For the sake of general policy, we chose to use a per capita measurement of GDP over employment compensation - or a rough ratio of what people made over what they were paid. The Czech Republic registered a result two times the EU average.
The country's citizens also score well in saving what they make; they put away 50% than the average European. Such thrift should provide some cushion against the current hard times, and provide future seeds for economic investment through bank lending.
Weaknesses. The country's ratio of household consumption to government consumption is 16% below the EU average. The higher this ratio, the more stable and dynamic the economy is. The country scores around the average both in government percentage of total employment and employee compensation to government consumption per capita; there is hope, therefore, that households will contribute an increasing part of GDP over the long-term - unless policy changes dramatically due to the current economic crisis.
Our energy intensity and CO2 emissions per capita are among Europe's worst. How much this is a factor of the country's economically vital manufacturing base or a consequence of wasteful use is unknown. What is known, however, is that climate change has become accepted reality by most leading policymakers globally, and that the two most powerful regulatory engines of the world, the EU and the US, are likely to make it a priority in the next four years. A second reality is that energy consumption shifts wealth to those who control energy sources. A high energy intensity means that the Czech Republic pays more for every unit increase in GDP than most other countries. Both realities put the country in a vulnerable position.