Different Economy, Different problems

b77306efd7ff55f7e59a5e55f3fe964f

The Czech economy is in far better shape than the USA, but has its own problems. It is a rather small but open economy, which means it is more dependent on foreign demand, than, say Poland or Germany. This was written by Jan Cienski in the Financial Times (June 21, 2011). He goes on to explain that about the only thing Czech can do is constantly improve the conditions for doing business in this country. They do that (see prior blog about the auto industry), but are weak in implementation at its (government) institutions. The current coalition aims to bring the budget deficit below 3%, but has to make unpopular decisions to get there. Also the in-fighting among its members is worse than the attacks from the opposition.

The biggest question is whether fractious politicians can muster the will to push through reforms that would make the country more business-friendly and fiscally secure.

“The measures we are taking are neither popular nor populist,”¬†admits Mr Necas, the prime minister.¬†“We are taking steps that we must take. For this reason we don’t expect (they) will be joyfully received by the public.”

“Without reforms, a scenario similar to states dependent on financial assistance from abroad would await us in the near future.

Another issue that comes up repeatedly in Central and Eastern European news, is corruption. 1/3 of German companies in the country regret the decision to invest. However, that has not prevented companies from continuing to invest, by virtue of the Czech’s strength in engineering and a well-educated and motivated work-force.

More about corruption in another blog.