Is the Czech economy a success story?: the case of CzechInvest, the strategic promotion agency in Czech industrial restructuring

Includes BibliographyThe study of CzechInvest, the leading and most prestigious investment and business development agency in the Czech Republic, seeks to describe and analyze the principles underlying the promotion of investment, restructuring and innovation in a country that has undergone a fundamental transformation of its economic, social and political operations in the last 18 years. The country is and interesting example for countries facing the challenges of growing openness to globalized markets and the need to restructure their international exchange patterns and institutional arrangements. The report shows how restructuring policies were channeled through the investment promotion agency with a flexible adjusting and trial & error approach to design policy instruments and to changes in the real world, while facing the dangers of corruption, bureaucracy and political capture."

Determining Factors of the Czech Foreign Trade Balance: Structural Issues in Trade Creation

Using panel data for 29 industries, we test alternative specifications of Czech export and import functions. The balance of trade is primarily influenced by the real exchange rate, aggregate demand and tariff changes. Reduced growth of the Czech economy after 1996 was an important factor that has kept the balance of trade at a sustainable level in the medium-term, contributing even to the appreciation of the real exchange rate. The secondary fundamental factors, relevant for structural adjustments, a sustainable trade balance and an equilibrium exchange rate, rest, however, on supply-side characteristics such as changes in endowments of physical and human capital, inflows of FDI and growing competitiveness of domestic production. We can argue that appreciation of the real exchange rate is a handicap to Czech exports, especially to exports to non-EU countries. Nevertheless, in the EU case, the appreciation of koruna was countervailed by tariff concessions, improved quality, switchover to commodities with higher contents of value added, gains associated with FDI and growing foreign demand absorption. At the same time, appreciation of the real exchange rate has significantly opened the Czech market to imports but the unconstrained import penetration remained blocked by the growing competitiveness of Czech products in costs, prices and quality.export and import specialisation; international trade; panel data estimation; production factor intensities; sectoral trade balance.

Determining Factors of Czech Foreign Trade: A Cross-Section Time Series Perspective

By quantifying the determining factors of Czech trade during 1993-2002, this paper enriches the empirical trade literature with evidence from an economy that has undergone intensive structural changes. Our findings lend significance to standard macroeconomic variables such as aggregate demand and the real exchange rate. Apart from these, however, liberalisation of tariffs, the evolution of unit prices of exports and imports, and economies of scale also played a significant role. An out-of-sample forecast for the trade balance was carried out for 2003-2004.Dynamic estimation, export and import dynamics, trade determinants.

Restructuring and Measurement of Efficiency in Firms in Transition

In this paper we try to explain some restructuring patterns of Czech textile and clothing industries from a microeconomic point of view. We introduce two measures of production efficiency (the technical and the allocative efficiency) and look at changes in the behaviour of enterprises. In 1994, after the chaos during the culmination of transition (1991-92), firms’ profits showed the first signs of dependency on efficiency. This fact can be taken as evidence of the creation of a competitive environment and a signal that long-term restructuring has led to economic patterns characteristic for standard market economies.Transition, Efficiency, Production function, Capital hoarding, Czech Republic

Adjustment and Performance of the Textile and Clothing Industry in the Czech Republic, Poland and Portugal

We discuss the restructuring of the textile and clothing industry in two East European countries. The paper compares the industry there with that in Portugal. Even though this study is only concerned with one particular industry, it reveals how wide and intensive the problems of transition are. The case studies discussed illustrate many of these difficulties. Former state-owned enterprises are reorienting sales to Western markets under the pressure of competition from a new and expanding private sector that sells imported products. Trade among former Comecon countries remains difficult in spite of the recent free trade agreement between Visegrád countries. The Czech Republic and Poland currently have a more dualistic market structure than Portugal: very large firms alongside a very fragmented private sector. We assess the contribution of the new, private firms in the Czech Republic to find that production and employment in the clothing industry performed quite well, in contrast with the former state-owned sector. The performance of and outlook for former state-owned enterprises are dismal, especially in textiles. In clothing, inward-processing trade has helped large firms. Using a simple analytical framework we show that the former Comecon countries were never as good at buying as the West is now. The changes in domestic demand appear to be the main explanation for the fall in output in the earlier years of economic transformation. In clothing, however, inward-processing operations are dampening the problems of transition.Industry Studies of Trade; Market Structure; Production; Textiles and Clothing

Competitiveness of the Textile and Clothing Industry: A Comparative Study of Poland, Czechoslovakia and Portugal

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ECONOMIC TRANSFORMATION: STRONG AND WEAK SIDE; A Statement of Independent Czech and Slovak Economists

This is in support of the governement program of transformation from the Soviet-type economy, to the free market economy in Czechoslovakia after the fall of Communism. The basic lines of the government program, that was outlined by Vaclav Klaus, are defended against the leftis criticism that favored either market socialism or the so called 'Third Way'. On the other hand the statement sais that 'the current transformation strategy has several weaknesses....it is apparent that the Government realizes some of these but, under political pressure, continues in the wrong direction.' Among the weaknesses the following have serious negative implications: (1) insufficient attention to the development of small and medium enterprise; (2)'two years after the velvet revolution in the whole of Czechoslovakia, small privatization created only about one tenth of the desirable number of small private enterprises.' (3)'the prohibition of secondary market in privatization vouchers.' (4)'a timid attitude of politicians, Governments, and Parliaments toward foreign capital.' (5) ' the lack of support to the development of banking, tax, and legal institutions. ' The statement was supported by 14 representatives of the economic profession.Socialism, Market Socialism, Soviet-type economy, transition, Central Planning, Fall of Communism, Third Way, Vaclav Klaus, Strategy of transition, Voucher Privatization, Foreign Capital,