Poland and the Czech Republic are increasingly important business partners. Both countries have shown that they can put their greatest economic advantages to good use.
In 2018, Polish foreign direct investment in the Czech Republic amounted to EUR 2.4 billion and the Czech Republic invested EUR 1.8 billion in Poland according to the National Bank of Poland. Importantly, both these figures are rising steadily. Compared to 2013, there has been an increase of 53.9% in Polish investment in the Czech Republic, and Czech investment in Poland has risen by a staggering 564%.
Poland’s proximity to Western Europe helps, and it also has a highly-qualified labour force as well as a well-developed financial market. The Czech Republic, on the other hand, offers a very convenient location for foreign direct investment in Central Europe.
For years now, the Czech economy has boasted the lowest unemployment level among the European Union Member States. In 2018, the employment rate in the 15–64 age group in the Czech Republic was the 5th highest in the European Union (it was ranked 1st for men and 11th for women).
Polish exports to and imports from the Czech Republic
According to the Polish Central Statistical Office (GUS), in 2019 the overall volume of trade between Poland and the Czech Republic rose to a record level of EUR 23.7 billion, which meant an increase of almost 85.8% since 2010. PKO Bank Polski analysts predict that by 2020, the value of Polish-Czech trade will reach around EUR 24.5 billion.
Poland’s exports include primarily motor vehicle parts and accessories, internal combustion engines as well as furniture, coal and other solid fuels and copper cables. Czech exports to Poland mostly consisted of cars and car parts, furniture, cyclic hydrocarbons as well as waste and iron and steel scrap.
Doing business in the Czech Republic and Poland
Data on the business environment in both countries deserve special attention here.
In the latest edition of the World Bank’s Doing Business 2020 ranking, which compares conditions for business in 190 countries around the world, Poland was ranked 40th, while the Czech Republic was ranked 41st. In the previous edition of the report, Poland was ranked 33rd, while the Czech Republic was in 35th place.
Doing Business 2020 statistics show that in the Czech Republic, it is slightly more difficult to start a business than in Poland (in this respect, the Czech Republic is ranked 134th and Poland 128th).
Given the considerable differences in population and area between the two countries, there are also inevitable differences in the number of businesses (in 2018, there were almost 4.4 million in Poland, and in the Czech Republic the number of active businesses exceeded 1.5 million). Market potential is reflected especially by the number of sole proprietorships, and there is a clear disproportion between the two countries in this respect. In the Czech Republic, which is a fraction of the size of Poland (78.9 thousand square kilometres, 10.7 million inhabitants) there were more than 1.0 million sole proprietors in 2018, while in Poland (312.7 thousand square kilometres, 38.4 million inhabitants), they numbered just over 3.1 million. The number of Czech companies with Polish capital has also grown steadily. Most of these are limited liability companies with the minimum required share capital.
Since 2007, the estimated number of Poles living in the Czech Republic (for periods longer than 3 months) has oscillated around 7,000–10,000.
Polish and Czech economic potential
When we look at the two economies side by side, it is clear that they have benefited from mutual cooperation. In the next few years, the number of cooperating companies from Poland and the Czech Republic should grow rapidly. PKO Bank Polski, which is active in both markets, has helped business to grow by adjusting its range of products to the environment which prevails in the country in question.