4.3 Economic profile of the Czech Republic
4.4.3 Opportunities
Opportunities usually lie in the external environment and represent a change that can lead to advantage. From this perspective the main opportunities might be:
• Building new smart/modern industries
• Vision – to create and have a greater vision for Czech economy orientation
• To fully embrace the Europe 2020 strategy and make sure that all available sources and funds provided by the Union are used up and used up effectively
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• Diversifying trading partners and start being more focused on fast developing regions outside of Europe (Asia, Africa, South America)
Building new/smart industries
One of the great opportunities that the Czech Republic has is to build new smart industries that would be able to generate great value added and, also allow fast transfer of knowledge and technologies. As it was shown in the subchapter dedicated to international trade, the current Czech industry relies heavily on automobile industry, related services and some metal manufacturing. The entire composition of the industry seem to be quite “old-fashined”. The Readiness index “labelled” the Czech Republic as traditional industrial country. It means a country that has managed to build quality industry but has not made the step towards future by incorporating new technologies and upgrading the single processes to the whole new level.
The Industry Initiative 4.0 seems to be the perfect chance to transform Czech industry into new modern sustainable system. It is built on using digitalization of production process with the help of Internet of Things, Artificial intelligence, transfer and accessibility of information, cloud computing and collecting big data. The impact of introducing this initiative would be vast. Likely, it will not touch only the industry itself but will spill over other areas, such as education, R&D, IT services, consulting and labour market. It also has the potential to attract new sectors, businesses and talents.
It will be a long process but Czech government should not hesitate to take actions immediately.
Vision
Czech government should create a vision for Czech economy. In the political field, Czech Republic used to have the label of a country that fights for human rights and freedoms. It was usually referred to Havel´s legacy and the concept of love and justice.
Czech government should create similar “brand” in the industry field. It should choose a few key industries that will be seen as strategic and the government would openly
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support their expansion and growth. So far, competitiveness has been tackled in a very technical way by analysing sectors and by trying to fix their imperfections. Great vison is missing. Till it happens, the country is destined to be Germany´s manufacturer.
Fully embrace Europe 2020
Unlike the Lisbon strategy, Europe 2020 was empowered by structural and cohesion funds. If a country wants to use sources from these funds, it must introduce a project that supports at least one of the 9 flagship initiatives that were defined by the Europe 2020. Innovative union, digital agenda, efficient Europe, industrial policy for globalization era, etc. just to name a few of them. Most of the flagship initiative are compatible with the Industry Initiative 4.0, Digital Czechia and other programs that were introduced by government. It can be a great opportunity to speed up implementation process of these programs.
Trading partners diversification
As was shown in the subchapter dedicated to International trade, most of the Czech trading partners are located in Europe. As high as 90 % of all export goes to Europe and around 70 % of total import comes from Europe. Government and government organizations (such as Czechtrade) should be actively creating platform for Czech companies to reach out to markets in other fast growing regions such as South Asia, certain parts of Africa or Latin America. Economic diplomacy should serve as bridge between Czech companies and markets in fast developing areas.
58 4.4.4 Threats
• Not to modernize Czech industry
• Keep relying on automotive industry as a flagship of Czech industry
Not to modernize the Czech industry
In the previous paragraphs, there were argued that modernization of the industry would be highly beneficial for the country. If the government has not enough will or power to introduce all the measures that are needed for the new generation industry, Czech Republic will very likely loose not only its competitive position but also economic growth and living standard. Most the Western European countries, such as Germany, the Netherlands, Switzerland, Skandinavian countries have been well track with digitalization, innovations and smart solutions already for a while. These countries are systematically building their competitive advantage on education and new technologies. Taking into account that most of trading partners are in Europe
Keep relying on automotive industry
Cars will surely not disappear from the market over the night, but there are certain trends in Western countries that should not be ignored. With improving integrated transportation system around countries, more and more people opt not to own a car.
The reasons may not be economical. It could stems from environmental awareness or car can simply become redundant due to ever improving transportation system in cities and plenty of services such as car sharing and uber taxi.
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Chapter Five: CONCLUDING REMARKS
5.1 Research Conclusion
Competitiveness is a complex economic category and should not be perceived purely as the ability to sell products in the markets. Clear definition of competitiveness is still missing, but many authors would argue that competitiveness should be closely connected to productivity. Only with high productivity, real competitiveness can be achieved.
Some authors believe that national competitiveness has nothing to do with government, whereas others say that role of government and its impact on national competitiveness can not be ignored. The newest theoretical approach to national competitiveness, the Systemic Approach, stresses the importance of settings of the system and the active role that the government plays. As the very goal should be to create an attractive environment for productive factors.
This theoretical approach has been embraced even by the World Economic Forum. In its Global Competitiveness Reports, it pays attention not only to economic performance of the state but also performance and efficiency of many different sectors.
Therefore, provides us with a bigger picture of the situation in certain country.
In the case of Czech Republic, the report identified that the macroeconomic environment is very good, even overcoming the European and North American´s standard. Also, areas such as technological readiness, financial market and health and primary education seem to be functioning very well. On the other hand, the Czech Republic must take measures to tackle in the inefficiencies in the field of Institution, Infrastructure and Innovations. Luckily, Czech government seems to be well on track with introduction of new generation projects that will prepare Czech Republic for the upcoming globalized era. In this regard, it is worth mentioning the e-government project that should make communication with state administration “user friendly”.
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Another initiative that deserve attention is Industry 4.0 and Digital Czechia. The projects have different goals but both of them deal with digital agenda. If implemented well, it can transform the Czech Republic into knowledge-based economy, , significantly improve its competitiveness and attractivity for production factors. In 2019, new plan called Innovation strategy for the Czech Republic 2019-2030 was introduced.
The strategy emphasizes importance of R&D, technological education, smart infrastructure and building starts-up and spins off environment. All these initiatives represent a great opportunity for the Czech Republic to catch up with Western Europe and fully use the potential the country surely has.
The great thing about the above-mentioned government´s efforts is that they are compliant with the EU´s flagship initiatives defined by the Europe 2020 strategy. To name a few of them: innovative union, digital agenda, efficient Europe, industrial policy for globalized era, etc. Czech government should cooperate closely with the EU to reach their common goals.
The objective of this work was to made recommendations on how to improve competitiveness of the Czech Republic and on how can the Czech Republic join the club of top 20 most competitive economies in the world:
• Maintain healthy macroeconomic environment
• Address the 3 weaknesses: Institutions, Industry, Innovations
• Build new/modern industries
• Fully introduce the Industry Initiative 4.0
• Create a greater vision for Czech economy
• Fully use the Europe 2020 potential
•
Diversify its trading partners and help companies expand to other markets
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5.2 Limitations
Scope of this work does not allow in-depth analysis of all factors that have impact on Czech national competitiveness. Only the most obvious factors as identifies by the Global Competitiveness Report, and secondary data related to international trade and economic indicators, were mentioned in this work.
5.3 Future Study
Future studies could focus on implementation of the Industry Initiave 4.0 and analyze aimpact the initiative would have on Czech industry and how it will influence Czech competitive position. Alternatively, studies could analyze the opposite scenario when the Industry Initiave 4.0 is not introduced and the country keeps relying on its automotive industry.
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