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