Current Affairs Why is the Czech Republic losing its competitiveness?
According to the 2013 Global Competitiveness report compiled by the World Economic Forum the Czech Republic has suffered the worst slide since monitoring began. In the past year it dropped seven rungs down the ladder to 46th place. Former finance minister, now rector of the College of Banking in Prague, Pavel Mertlík explains what caused the slump.
“It is very clear. The world competitiveness report is based on 12 separate indicators and in one case there was a steep year-on-year fall and that is in the quality of public administration. Going by this indicator we are in 86th place as regards competitiveness out of 130 states altogether. The slump here is the biggest. In the credibility of politicians we are 146th –and there are only two countries with a worse result and that is Lebanon and Argentina. We are ranked as the third worst country worldwide as regards the quality and credibility of the political representation. On the other hand in other indicators there were no important changes year-on-year and in some of them our position even improved slightly, such as in the quality of education.”
You say that this slide was caused by one negative indicator – albeit a very serious one –does this make it easier to turn around the trend and improve our ranking ?
“I am not sure. I am not sure for two reasons – one is the quality of administration where the Czech Republic has many shortcomings like the absence of a civil servants’ law –this is the reason why corruption in the Czech Republic tends to be higher than in some other countries where the social status of civil servants is much better protected. There are many systemic things that need to be done in the area of public administration and which cannot be done from one year to the next. That would be a five-to-six year transformation process and technically it is not easy. The second point is that the reason behind this slide is also the low credibility of politicians. Credibility is something that you can lose overnight but is hard to win back. It is a psychological problem. Even if after the elections we were to get perfect politicians –which is not realistic, but imagine if we did – it would still take time for them to rebuild that lost credibility and political capital on an international scale. So turning that trend around is a question of several years at the least.”
“I think as regards exports it does not have any significant importance, at least in the short-term. If you look at how the indicators are constructed, it is more about measuring the attractiveness of the country for foreign investors, for indirect investors, and as regards direct investment this is quite a negative outcome and definitely it may influence their possible decision-making about investing in central Europe – they may look to some other country that the Czech Republic.”