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Czech economy-

27/06/2013

http://www.economonitor.com/edwardhugh/2013/06/27/the-czech-economy-that-didnt-bounce/

The problems of Czech economy, it mainly a  leadership problem. And i don’t speak only about political leadership but also economic-business leadership. This situation is of course the result of 40 years of communistic regime, that was much more devastating in Czechoslovakia than in Poland or Hungary, where some private sector prevailed even during the communistic times, while in Czechoslovakia not. The communist already in late fifties proudly declared that no private entities exist in Czechoslovakia, and then accordingly changed the name of the country from National Democratic to Socialistic Republic. Of course the following 30 years were devastating, and wiped out most of the  economically productive and initiative potential entrepreneurs. At early nineteens Vaclav Klause, the previous president and prime minister of the time, tried to correct this situation with handing over the economic entities to local entrepreneurs (the second line communistic managers of these entities), with a process called privatization. He failed and i don’t blame him. Nobody could know who and what capacity these managers have and the privatization had to happen in very short time, before the political forces opposing such a process will wake up. By the way the disproportionally higher  foreign ownership of Czech economy compared to the Czech foreign possessions is result of this failure.

It seems to me lately new wave of local entrepreneurs and investors who use the opportunity, that  the western institutional investors withdrew from the market, and some big foreign investors are rather in the mood to sell than buy. There were also some bankruptcies but rather marginal. I am hopeful that  more than 20 years after the collapse of the communistic regime and the split of Czechoslovakia to two countries, finally a new local business elite will start to be dominant in the market. No highly developed European economy can be sustainable without it. With the economic crisis it became obvious, the western investors at the end of the day are not less local patriots than their compatriot governments.

As to the political elite, it is in continuous crisis at least for the last ten years. Governments come and go, just the character of the scandals don’t change. The last government of Mr. Necas came to being after the rumors about political corruption reached unsustainable level. Mr. Necas was presented as the Mr. Clean, (maybe the only politician in the previous governments without involvement in the many affairs appearing and disappearing from the political scene). His resignation because of a new affair, that is rather about the He and She relation than the usual economic offense, is very peculiar. Anyway during his 3 years of reign the trend in Czech politics was rather a slow clean up than a new waive of corruption affairs. New conspiracy theories try to explain the last day events that brought to his resignation, with all the usual suspects taking part (CIA, KGB etc.) and all speak about some economic interest around the big new energy projects the Czech government has to decide. But these stories are to long for this forum and are rather from the realm of the fantasy than from reality. Only the future will show us where the Czech political scenery is heading to, but as to the economic developments, i am rather optimistic, the economic boat showed in the past that it can float with or without the politicians quite well.

From → Economist view, MENUE

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