New Research Says Czech Republic Magnet for Growth and Investment
Prague has topped an international survey ranking 223 regions across Europe based on economic growth and market size. In the index, Prague has been named the most attractive investment region in Europe. Another international report has named the Czech Republic as one of the top three outsourcing destinations worldwide.
In a report released in the first quarter of 2005, The Centre for Economics and Business Research LTD (CEBR), a London-based independent consultancy and leading authority on the European Union economy, said Prague topped its rankings of 223 regions within Western and Eastern Europe. The index evaluated economic growth prospects for each region; the level of education of each region’s population; and its market size. With 100 percent as the average for the EU, Prague ranked the highest with 178 percent. CEBR’s index showed Eastern European regions score well above the EU average in terms of growth prospects, and in offering investors a plentiful supply of highly skilled labor. Also noted in the report was that wages in the East are well below laborers in Western Europe.
CEO Briefing, Corporate Priorities for 2005, a report by the Economist Intelligence Unit (EIU), also released in early 2005, found that global offshoring of IT services, manufacturing and other business functions will continue to grow over the next three years. The report ranked Czech Republic third behind India and China, respectively, as future leaders in global offshoring. Singapore ranked fourth, and Poland rounded out the top five.
The EIU report, in which 500 senior executives were surveyed, pointed to the Czech Republic’s attractiveness as both a near-sourcing and offshoring destination due to its attractive regulatory environment, cultural ties and proximity to other emerging and established markets in Europe.
The nation’s latest macroeconomic statistics continue to demonstrate steady economic expansion, spurred in part by consistent FDI. Estimates for 2004 show an economic growth rate of 4 percent and the receipt of $4.46 billion in FDI for the year, according to preliminary data from the Czech National Bank.
“At our one year anniversary as an EU member nation we are very excited with what has been accomplished and what lays ahead for the future of the Czech economy,” stated Radomil Novk, Chief Executive Officer of CzechInvest. “As a country we have clearly reached a new stage of economic development.”
As the leading transition economy worldwide in attracting FDI, the Czech Republic has received approximately $42.1 billion in recorded investment since 1993, and the EIU predicts ongoing foreign investment in the $3 – 5 billon range through 2010.
In 2005 Lufthansa, the world’s largest airline, chose the Czech Republic for its new services center. Hewlett-Packard selected the Czech Republic for its regional headquarters for computer supply chain management for Europe, the Middle East and Africa (EMEA). Sun Microsystems, ExxonMobil and DHL have also selected the Czech Republic for key R & D and business operation centers.
Global ranking of top locations for offshoring:
1. Score 7.76 – India
2. Score 7.34 – China
3. Score 7.26 – Czech Republic
4. Score 7.25 – Singapore
5. Score 7.24 – Poland
6. Score 7.23 – Canada
7. Score 7.19 – Hong Kong
8. Score 7.17 – Hungary
9. Score 7.17 – Philippines
10. Score 7.16 – Thailand
11. Score 7.13 – Malaysia
12. Score 7.12 – Slovakia
13. Score 7.09 – Bulgaria
14. Score 7.08 – Romania
15. Score 7.08 – Chile
20. Score 6.91 – USA
29. Score 6.60 – UK
Source: Economist Intelligence Unit, 2005
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