CHANGES IN COMPETITIVENESS OF THE CZECH REPUBLIC WITHIN PREVIOUS EU FINANCIAL FRAMEWORK
6 CONCLUSION
Objective of the paper are to bring up a comparative measurement of competitiveness of the country and to show change of competitiveness of the Czech Republic in previous financial framework of EU. For the analysis is used Porter´s diamond model specified to double diamond model.
To conclude with, according to used indicators in Porter´s diamond the competitiveness of the Czech Republic has been improved in the time period 2007-2013. The increase of the value of competitiveness is slight; the change from year 2007 to 2013 was only 7.65 %. One from the important reasons that influenced the competitiveness growth is rapid increase in number of employees in the sector R&D. R&D sector and its size has a significant share on enhancing competitiveness. R&D brings up to the market updated inventions and development of ideas and shift the level of productivity further. This means good beginning step to the better competitiveness of the Czech Republic. In long-term perspective increase of R&D employees
91
should contribute to faster change of economic structure and the effect of economic development occurs later.
There are several indicia that demonstrate continuing support to export-oriented economy.
Firstly, value of export grown up and secondly barriers for international trade in form of a bigger competition between local and foreign products increased. This signal shows significant role of export for competitiveness improvement for small economy like the Czech Republic.
Further hypothesis suggested eventual correlation between competitiveness of the country and allocated subsidies via EU funds. This paper assumed that subsidy is a financial support from one of the EU funds, which will contribute to economic and social development of member countries and thereby will reduce the significant regional differences between prosperous and lagging regions. Subsidy according its aim should enhance competitiveness of supported state or region. Both, in theoretically and practically usage are subsidies used as an investment into economy in form of financial support of human and physical capital. It also supports faster diffusion of technological knowledge and change of ideas among people. Importance of support to production, innovation and clusters in context of EU is crucial in order to ensure economic development. From that it can be assumed that subsidy is reasonable and should help to economic development in the international context in way of support increase of productivity and innovative process.
All the aid that the EU provides is core attributes of competitiveness of the country. As previously stated competitiveness lays on interdependence of complex features of state, region and company. Competitiveness depends on dynamics of action, long-run productivity, innovation process, and policy environment to attract companies in global perspective.
To conclude with, the result shows that interrelations among foreign economies might have greater influence on the competitiveness of the Czech Republic than European subsidies.
International business relationships and stability of world economy influence small economies very rapid. Allocated subsidies might also express its effects in long-term perspective and so the repeating of evaluation after several years will show more details of the effects.
References
Bathelt, H., Malmberg, A. & Maskell, P. (2004). Clusters and knowledge: local buzz, global pipelines and the process of knowledge creation. Progress in Human Geography, 28(1), 31-56.
Bontho, A. (1995). The Assessment: International Competitiveness. Oxford Review of Economic Policy, 12(3), 1-16.
Cho, D. & Moon, H. (2000). From Adam Smith to Michael Porter: Evolution of competitiveness theory. Asia-Pacific Business Series, 2(1).
Czech Statistics Officer Database. (2015). Available at: https://www.czso.cz
Delgado. M., Ketels. C., Porter. M. E. & Stern. S. (2012). The Determinants of National Competitiveness. NBER Working Paper No. 18249.
European Commission. (2015). Regional Policy. Available at: https://cohesiondata.ec.europa.eu/
European Commission. (2012). REGULATION (EC) No 1080/2006 of the European Parliament and of the Council of 5 July 2006 on the European Regional Development Fund and repealing Regulation (EC) No 1783/1999 Available at: http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32006R1080&from=CS
Economic Forum: Global competitiveness reports 2007, 2008, 2009, 2010, 2011, and 2013
Eurostat. (2015). Available at: http://ec.europa.eu/eurostat/web/balance-of-payments/data/main-tables
92 Eurostat Database. (2015). Available at: http://ec.europa.eu/eurostat
Forth, P. The Global Consulting Group. Available at: https://image-store.slidesharecdn.com/86eb743e-0827-4717-a7d7-05e77afc7036-original.jpeg
Krugman, P. (1994). Competitiveness: A Dangerous Obsession. Foreign Affairs, 73(2), 28-44.
Lucas, R. (2009). Ideas and Growth. Economica, 76(301), 1-19.
Lucas, R. (1988). On the Mechanics of Economic Development. Journal of Monetary Economics, 22(1), 3-42.
Molendowski, E. & Źmuda. M. (2013). Changes In Competitiveness Among The Visegrad Countries After Accession To The European Union: A Comparative Analysis Based On A Generalized Double Diamond Model.
Versita 16(4), 121-153.
Moon. H. & Rugman. A. & Verbeke. A. (2000). Extended Model: The Generalized Double Diamond Model. [in:]
Cho. D. & Moon. H. (ed.) From Adam Smith to Michael Porter. Asia-Pacific Business Series 2(1).
Porter, M. E. & Rivkin. J. W. (2012). The looming challenge to U. S. competitiveness. Harvard Business Review 90(3), 54-62.
Porter. E. M. (2004). Competitive Advantage: Creating and sustaining superior performance. Detroit: Free Press.
Porter. M. E. (1990). The Competitive Advantage of Nations. New York: Macmillan Press.
Prague International Airport. (2015). Availabe at: http://www.prg.aero/cs/
Romer, P. (1986). Increasing Returns and Long-Run Growth. Journal of Political Economy, 94(5), 1002-1037.
Rubini. L. (2010). The Definition of Subsidy and State Aid: WTO and EC in comparative perspective. Oxford:
Oxford University Press.
Strukturální Fondy. (2007). National Strategic Reference Framework. Available at: http://www.strukturalni-fondy.cz/getmedia/c81992d9-a5a7-4382-a859-a7ec13e9d654/Narodni-strategicky-referencni-ramec-CJ-cervenec World Bank Database. (2015). Available at: http://data.worldbank.org
Contact information Ing. Kristýna Brzáková
Technical University of Liberec, Faculty of economics Studentská 1402/2, 461 17 Liberec
+420 485352406
kristyna.brzakova@tul.cz
93
Appendix 1: Explanation of the indicators taken from The Global Competitiveness Report
● Business impact of rules on FDI: To what extent do rules governing foreign direct investment encourage or discourage it? (1=strongly discourage FDI; 7=strongly encourage FDI).
● Buyer sophistication: In your country, how do buyers make purchasing decisions? (1=based solely on the lowest possible price; 7=based on a sophisticated analysis of performance attributes)
● Control of international distribution: To what extent is international distribution and marketing in your country owned or controlled by domestic companies? (1=not at all, they take place through foreign companies; 7=extensively, they are the primarily owned and controlled by domestic companies).
● Domestic market size index: Sum of gross domestic product plus value of imports of goods and services, minus value of exports of goods and services, normalized on 1-7 (best) scale (GCR hard data).
● Extent of technology transfer via FDI: To what extent does FDI bring new technologies into your country? (1=not at all, 7=FDI is a key source of new technology).
● Foreign market size index: Value of exports of goods and services, normalized on 1-7 (best) scale (GCR hard data)
● Intensity of local competition: How would you assess the intensity of competition in the local markets in your country? (1=limited in most industries; 7=intense in most industries).
● International value breadth: Domestic companies (1=are mainly engaged in raw material processing and production; 7= not only produce but also take part in the research, marketing, logistics and customer service).
● Local capacity of innovation: In your country, how do companies obtain technology? (1=exclusively through licenses or imitating foreign companies; 7=by conducting formal research and pioneering own products).
● Local supplier quantity: How numerous are local suppliers in your country? (1=largely non-existent;
7=very numerous)
● Prevalence of foreign ownership: How prevalent is foreign ownership of companies in your country?
(1=rare; 7=prevalent).
● Prevalence of trade barriers: In your country, to what extent do tariff and non-tariff barriers limit the ability of imported goods to compete in the domestic market? (1=strongly limit; 7=do not limit).
● State of cluster development: In your country’s economy, how prevalent are well-developed and deep clusters? (1=non-existent; 7=widespread in many fields)
94 Appendix 2: Collection of empirical data
Factors of production Domestic indicators
activity rate 15-64 (%) eurostat 69,8 69,4 69,6 69,8 70,1 70,7 72,3
labour productivity based on PPS per employed person (%
of EU28 total) eurostat 76,3 74,1 75,9 74,3 74,6 73,9 72,0
average wage monthly (CZE)
CSU 20 927 22 653 23 425 22 748 23 144 24 126 24 061
number of employees in R&D scientist and engeneers 25-64 (% od total employment)
eurostat 3,8 3,7 4,3 3,9 4,9 5,4 6,0
R&D expenditure level (% of
GDP) eurostat 1,3 1,2 1,3 1,3 1,6 1,8 1,9
capacity of innovaiton /GCR 4,3 4,2 4,2 4,1 4,0 4,3
International indicators value of export (milion EURO)
eurostat 89 382 99 809 80 983 100 311 117 054 122 230 121 588
FDI inflow (foreign direct investment, US $) the world
bank 10 606 063 122 6 572 516 198 2 868 837 937 6 119 064 334 2 248 932 510 7 975 891 701 5 006 911 507 technology transfer via FDI
/GCR 5,8 5,5 5,4 5,3 5,3 5,1
Demand conditions Domestic indicators GDP per capita in market
prices (EURO) eurostat 12 800 14 800 13 600 14 300 14 800 14 600 14 200
Teriary education level (% from
30-34 age) 80,6 78,3 78,1 77,7 77,0 76,4 78,4
Buyer sophistication /GCR 4,4 4,1 4,1 3,9 3,6 3,4
International indicators Value of export (tousands
EURO) CSU 82 587 376 99 246 955 80 992 054 100 318 540 117 056 930 122 244 052 122 185 683
Rivalry among companies Domestic indicators Intensity of local competition
(GCR) 5,5 5,8 5,8 5,7 5,6 5,8
Value chain breadth (GCR) 4,8 4,8 4,7 4,3 4,3 4,6
Interantional indicatiors Business impact of rules on
FDI (GCR) 5,9 5,7 5,8 5,4 5,2 4,7
Prevalence of foreign ownership
(GCR) 5,0 5,5 5,5 5,2 5,0 6,0
Prevalence of trade barriers
(GCR) 5,4 5,9 5,9 5,7 5,4 4,3
Supporting industries Domestic indicators
Local supplier quantity (GCR) 5,5 5,7 5,7 5,4 5,3 5,2
Internet availability (% of Individuals who have used a search engine to find
information) eurostat 50,0 68,0 72,0 76,0
International indicators Control of international
distribution (GCR) 3,7 3,9 3,7 3,5 3,6 3,5
Accessibility of air-transport
infrastructure 12,4 12,6 11,6 11,6 11,8 10,8 10,9
95