The Czech Republic is almost constantly battling against its CEE neighbors to attract large foreign investors for whom government incentives such as tax breaks can be decisive when choosing a location for an investment venture. In given the current economic climate and downturn in investments less-developed regions especially would benefit from large inflows of investment capital, writes Jindra Předotová, a consultant at Deloitte Advisory.
The economic crisis had a large impact in foreign direct investment (FDI) both out of and into the EU-27 in 2010. Investments from the EU-27 into the rest of the world fells 62 percent compared with the previous year. Investments into the EU-27 fell even sharper, by 75 percent. The US was the main source of investment into the EU-27 although it was down from €97 billion euro in 2009 to €28 billion in 2010.
Foreign investors pumped €5.12 billion in the Czech Republic in 2010, more than double the total of 2009, as economic confidence returned. But the prestigious Vienna Institute for International Economic Studies sees that total falling back this year in spite of a prediction that foreign direct invetment across Central and Eastern Europe will surge ahead by 27 percent.
Following a 45 percent year on year drop in foreign direct investment (FDI) in Central and Eastern Europe (CEE) in 2009, capital inflows began to pick up again in 2010, according to an Erste Group report. The Czech Republic led the pack, with FDI inflows more than doubling last year at almost 4 percent of GDP.
Although salaries are on average higher in the Czech Republic than in Hungary and Slovakia — and even approaching those of some German states — Czech workers as a whole are less skilled than their neigbors in Central Europe, a Kienbaum Management Consultants survey commissioned by the Czech-German Chamber of Commerce (ČNOPK) shows.