INVESTORS IN MSK

Relationships and Cooperation between

Czechia and Germany as a Dialog

between Modern Sovereign States

The Chairman of the Editorial Board for POSITIV magazine, Radúz Mácha, talked to the ex-minister

of Industry and Trade, Karel Havlíček, about relations between Czechia and Germany, mainly in the

field of economic relations.

Germany has the world’s fourth largest

economy, making it the

Czech Republic’s largest business

partner and a key foreign market target

for our exports. From Czechia’s point

of view, trade balance between the

countries has been active for a long

time now. Can we still improve upon

these very positive results? In the

structuring of our exports to Germany,

for example?

Germany has been Czech Republic’s

largest and most important business

partner since the country’s creation.

In 1993, Germany contributed to 29%

of domestic exports, and twenty-seven

years later, it is now 32.7%. In 2016,

Czechia managed to climb the ranks to

reach the top ten of Germany’s biggest

business partners and it has held that

position ever since. The activity of the

trade balance between the two countries

has been important to the balance within

Czechia since 1998, positively affecting

payment balances within the country.

The commodity structure of Czech exports

into Germany has gradually experienced

great change. The proportion of exported

machines and means of transport has

increased (from around 46% in 1999 to

61% in 2020) and, within that same time

span, the proportion of exported sorted

market products decreased from 25%

to 14%. This lowered percentage share

involved products such as base metal and

iron constructions or wired products, that

is to say, commodities with lower added

value.

It is more than apparent that global

economic changes will have an effect

on the structure of domestic export

to Germany. It is all dependent on our

economy’s ability to adapt. We can

definitely expect changes to take place

faster than they did previously, meaning

those that react the fastest will reap the

largest benefit. It will be a great challenge

not only for the domestic economy but

also globally.

Germany has begun to put into

effect crucial processes involving

modernization and economy greening,

which are manifesting themselves in

the forms of digitization (Industry

4.0 strategy, artificial intelligence, the

internet of things, e-commerce), and

changes in the politics of energetics

(Energiewende), which involves the

support of electricity production via

renewable means and a shift away from

nuclear power and coal by 2038. What

does this mean for us?

The new coalition deal, called ‘Courage

towards further progress—alliance for

freedom, equality and sustainability’, is

what will dictate the direction of further

development of the German economy.

The be all, end all of this will be digitization

which, among other things, assumes statewide subsidized fibre optic coverage for

homes and the standardization of 5G

mobile communications. Investments will

also be focused on climate protection.

The German economy belongs among

the world’s strongest and it also has

great global connections. The Czech

economy is obviously very closely linked

to Germany’s. That is why it is important

to keep up with changes and trends

happening within the borders of our

Western neighbour and to make use of

the economic potential held by one of the

engines of the global economy.

Small and midrange businesses,

supported by supranational companies

and concerns, form the backbone of the

German economy. Should this model

serve as inspiration for us?

Small and midrange businesses are

generally considered to be the backbone

of any economy. In Germany, they

represent 99.5% of local companies,

97.1% of German exporters and they

provide more than half of the jobs. These

businesses serve as the driving force in

innovation, technology, and economy for

our Western neighbour. They possess great

flexibility in reacting to market changes,

production adaptation and are therefore

able to quickly innovate products, services

and technological solutions.

Comparing Germany, in other words,

an economic giant, with Czechia,

a mediumweight economy, is not very

easy. Furthermore, our economy saw

essentially no development under market

conditions in the second half of the 20th

century. Therefore, if we are to take

inspiration from Germany, I think it should

be in the outstanding functionality of their

economic system.

As ex-Minister of Industry and Trade,

what are your hopes regarding

economic relations between Czechia

and Germany?

I view the neighboring relations between

Czechia and Germany as a dialogue

between modern sovereign states that

express mutual interest to cooperate and

develop. I am not concerned about the

relations between our countries, though

election results always play a role in this.

As for the future economic development

of the Czech Republic, we have great

goals in mind regarding our branding as

‘The Czech Republic: The Country for the

Future’, part of which is the support of

scientific and technological development

aimed at maintaining our competitiveness.

We would like to continue on our path

of cooperation with our economically

powerful neighbor and deepen our

business ties. This means, for example,

conducting joint projects within Industry

4.0, the implementation of AI into the

production process and the strengthening

of ecological aspects in production.

Mr Havlíček, thank you for the interview.

Text: redakce

Foto: archiv Karla Havlíčka

POSITIV 4/2021 ǀ 45