Download General overview and Economy Key statistics and Main industries

MEDARD Myriam (s00065426)
BBS International Marketing - 3rd year
SIMULATION GAME – COUNCIL OF MINISTERS OF THE EUROPEAN UNION
General overview and Economy

Key statistics and Main industries:
STATISTICS
GDP ranking (2004)
- 39th by nominal volume
- 39th by nominal volume per capita
- 41st by volume adjusted for PPP
- 36th per capita adjusted for PPP
GDP PPP (2004)
$187.5 billion
GDP growth rate (2005)
6.0%
GDP per capita (2005)
$19,488
GDP by sector (2004)
- agriculture (3.4%)
- industry (39.3%)
- services (57.3%)
Inflation rate (2005)
1.9%
Pop below poverty line
Labour force (2004)
N/A
Labour force by occupation (2002)
services (58%)
industry (38%)
agriculture (4%)
Unemployment (2005)
7.9%
Main industries
motor vehicles and parts, machine tools, electric
power equipment, metals, chemicals, coal, food
processing, glass, beverages, tourism.
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5.25m
Services sector, role of agriculture, main trading partners:
 About the services sector:
The accessibility and range of services in the Czech Republic has virtually reached the
standards of the European Union. Services include support for tourism, and also services for
businesspeople and students. The telecommunications, banking, accommodation and
gastronomic markets have developed rapidly. Healthy competition has forced prices down
and the rapid increase of quality has attracted many customers.
 Role of agriculture:
The total area of agricultural land resources of the Czech Republic is 4,269 thousand hectares
(54.1% of the total area of the country). Based on complex soil research, and according to
European Union criteria, the bulk of farm land in the Czech Republic was classified as less
favorable areas and areas with ecological limitations (LFA).
The common goal of these areas is to secure such development of multifunctional agriculture
that would balance productive and non-productive functions of agriculture, forestry and water
management, with regard to the character of natural and socio-economic conditions. In
addition, it should contribute to recovery of the balance between the volume of production
and market capacity, for the ecological, cultural and architectonic protection of country areas.
The Czech agrarian conception is divided into two phases:
- The first (Revitalization) was completed by the end of 2001 and was focused mainly
on recovery and stabilization of the agrarian sector and on institutional preparation for
its entry to the EU;
- The second (Adaptation) leads to as fast area adaptation of the agrarian sector to the
conditions of common EU agrarian policy as much as possible, in all areas. Also
Structural Funds can help achieve this objective by means of an operational program
called Development of Country and Multifunctional Agriculture.
 The main export trading partners are:
- Germany 36.1%,
- Slovakia 8.4%,
- Austria 6%,
- Poland 5.3%,
- UK 4.7%,
- France 4.7%,
- Italy 4.3%,
- Netherlands 4.3%
 The main import trading partners are:
- Germany 31.7%,
- Slovakia 5.4%,
- Italy 5.3%,
- China 5.2%,
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- Poland 4.8%,
- France 4.8%,
- Russia 4.1%.
Developments over the last decade:
In the early 95’s, the republic's economic transformation is far from complete: the government
still faces serious challenges in completing industrial restructuring, increasing transparency in
capital market transactions, privatizing the banking sector, transforming the housing sector,
privatizing the health care system, and solving serious environmental problems.
Although there is a political and financial crisis in 1997, the Czech Republic's image is one of
the most stable and prosperous of post-Communist states. But delays in enterprise
restructuring and failure to develop a well-functioning capital market played major roles in
Czech economic troubles. The currency was forced out of its fluctuation band as investors
worried about the current account deficit (which reached nearly 8%) and which cut
government spending by 2.5% of gross domestic product. The basic transition problem
continues to be too much direct and indirect government influence on the privatized economy.
The government established a restructuring agency in 1999 and launched a revitalization
program - to spur the sale of firms to foreign companies. Key priorities include accelerating
legislative convergence with EU norms, restructuring enterprises, and privatizing banks and
utilities, and increasing export growth and investment.
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Present economic situation, economic outlook:
The Czech Republic has been recovering from recession since mid-1999. Growth in 2000 was
led by exports to the European Union, especially Germany, and foreign investment, while
domestic demand is reviving. The rate of corruption remains one of the highest among OECD
countries. Uncomfortably high fiscal and current account deficits could be future problems.
Moves to complete banking, telecommunications, and energy privatization will add to foreign
investment, while intensified restructuring among large enterprises and banks and
improvements in the financial sector should strengthen output growth.
The Czech government has expressed a desire to adopt the euro currency in 2010, but its
introduction is only in the early planning stages and there are growing doubts whether budget
deficit will not force postponement.
Politics
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History and geography of the state:
 History:
The Bohemian or Czech state emerged in the late 9th century when it was unified by the
Přemyslids. The kingdom of Bohemia was a significant local power during the Middle Ages.
It was part of the Holy Roman Empire during the entire existence of this confederation. After
the fall of the Holy Roman Empire, Bohemia became part of Austria-Hungary.
Following the collapse of the Austro-Hungarian Empire after World War I, the independent
republic of Czechoslovakia was created in 1918. This new country incorporated regions with
majority German, Hungarian, Polish and Ruthenian speaking populations. Although
Czechoslovakia was a centralist state, it provided what was at the time rather extensive rights
to its minorities. However, it did not grant its minorities any territorial political autonomy,
which resulted in discontent and strong support among some of the minorities to break away
from Czechoslovakia. Adolf Hitler used the opportunity and, supported by Konrad Henlein's
Sudeten German Party, gained the majority German speaking Sudetenland through the
Munich Agreement. Poland occupied areas with Polish minority around Český Těšín, while
Slovakia gained greater autonomy, with the state being renamed to "Czecho-Slovakia".
Eventually Slovakia broke away further in March 1939, allied to Hitler´s coalition and the
remaining Czech territory was occupied by Hitler who installed the so-called Protectorate of
Bohemia and Moravia, which was proclaimed part of the Reich and where the Protectorate
President and Prime Minister were subordinate to the Nazi Reichsprotektor.
Czechoslovakia uneasily tried to play "bridge" between the West and East; however the
strengthening Communist Party of Czechoslovakia took over in February 1948, bringing the
country within the Soviet sphere of influence. In August 1968, an invasion by Warsaw Pact
troops ended the efforts of the country's leaders to liberalize party rule and create "socialism
with a human face" during the Prague Spring.
In November 1989, Czechoslovakia regained its political independence through a peaceful
"Velvet Revolution". On January 1, 1993, the country peacefully split in two, creating the
independent Czech and Slovak republics.
The Czech Republic joined NATO in 1999 and the European Union on May 1, 2004. From
1991 the Czech Republic, then Czechoslovakia, has been a member of the Visegrad Group.
 Geography:
The Czech landscape is quite varied. Bohemia to the west consists of a basin, drained by the
Elbe and Vltava Rivers, surrounded by mostly low mountains such as the Sudeten with its
part Krkonoše, where one also finds the highest point in the country, the Sněžka at 1,602
metres. Moravia, the eastern part, is also quite hilly and is drained predominantly by the
Morava River, but also contains the source of the Oder River.
Water from the landlocked Czech Republic flows to three different seas: the North Sea, Baltic
Sea and Black Sea.

Particularities of its government and political conditions:
Politically, the Czech Republic is a multi-party parliamentary representative democratic
republic.
According to the Constitution of the Czech Republic, President is the head of state while the
Prime Minister is the head of government, exercising supreme executive power.
Legislature is bicameral, with the Chamber of Deputies and the Senate.

Developments over the last decade:
As the system in Czech conditions repeatedly produces very weak governments (a specific
problem is about 15% support of the Communists shunned by all the other parties) there is a
constant talk about changing it but without much chance of really pushing the reform through.
An attempt to increase majority elements by tweaking the system parameters by ČSSD and
ODS during their "opposition agreement" 1998–2002 was vehemently opposed by smaller
parties and blocked by the Constitutional Court as going too much against the constitutionstated proportional principle; only a moderated form was adopted. This, however led to a
stalemate in 2006 elections where both the left and the right each gained exactly 100 seats,
with no foreseeable chance to form a stable government; as many commenters point out, the
earlier system would have given the right 3-4 seats majority.
Finally, the last point we can notify about the politic development deals with the Parliament
which overturned a veto by President Václav Klaus, in March 2006, and which resulted that
the Czech Republic became the first former communist country in Europe to grant legal
recognition to same-sex partnerships.
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Particular challenges facing this country:
Current Europe implements decentralization processes. Subsidiarity is the key principle for
further development as it sets basic criteria for dividing competences between the state and its
administration.
This principle ensures that all issues are to be solved at the lowest possible level and in
consideration of effectiveness. The principle is not used only if other limits like control or
separation of powers need to be kept.