Current Affairs World Bank marks Czech Republic's graduation to 'developed' status
This Tuesday the President of the World Bank Paul Wolfowitz is in Prague to mark an important shift in how the Czech Republic is viewed. Until now, the country was officially labelled a developing country; since the fall of communism in 1989 it has been a beneficiary of World Bank funds that have had a profound impact on the country's transformation to a market economy and becoming a full-fledged democracy. Now, on February 28th, the Czech Republic officially graduates to 'developed'. That has been a long-time coming, agreed formally a year ago, and is of course largely symbolic. But, the shift will also have some significant effects.
Jan Velinger spoke to economist Marketa Sichtarova just a little while ago:
"I suppose this is just a symbolic act, because in reality the Czech Republic is already a part of the European Union, which means it is already quite 'developed'. This act will probably have no immediate impact on the public. The most immediate for the country will be the fact that the country cannot receive further funds from the World Bank, on the contrary it will now itself have to contribute to less-developed countries."
The Czech Republic shifting from beneficiary to provider bringing with it new responsibility, are there positive effects though from the Czech Republic receiving 'developed' status?
"The Czech Republic can receive a better-looking 'label' on international markets, foreign trade. If Czech companies will be able to successfully market the fact that the Czech Republic has graduated then their goods may be better 'sellable' abroad, leading to higher profits. [But there's another interesting point]: the Czech Republic has a good combination of two factors: first, it is a developed country but it still has a very cheap work force, and that's not a very common combination in a single country. For foreign capital and direct foreign investment this remains a good combination. As a result of the new World Bank rating the Czech Republic [will likely] receive more foreign direct investment in future years."