| The Czech Republic was created in 1993 when | | | | business creation and legislation governing business |
| Czechoslovakia split into two countries, the other | | | | while improving access to information concerning |
| being Slovakia. The Czech Republic joined the | | | | statistics and financing opportunities. Additionally, well |
| European Union (EU) in 2004 and is considered to be | | | | known organizations such as The Kauffman |
| part of the EU8 which consists of eight Central | | | | Foundation offer a wealth of information and analysis |
| European and Baltic countries who recently acceded | | | | to assist current and potential business owners |
| into the EU. Many democratic and economic | | | | interested in the Czech Republic. |
| developments occurred in the mid-90s as a result of | | | | Economic Conditions |
| the split and earlier collapse of the Soviet Union, | | | | The Czech Republic GDP growth rate has ranged |
| including the 1992 Czech National Council Act No 299 | | | | from 1-2% in 2007-08. As with many countries during |
| that supports the creation of small and medium-sized | | | | this time period, the Czech Republic is experiencing an |
| enterprises. The accession into the EU looks to | | | | economic slowdown and resulting reduced |
| provide new opportunities. | | | | consumption. Private consumption had been growing |
| Converging to a Euro based currency will require the | | | | by 5-6% per year, and is projected to slow to less |
| Czech Republic to meet a set of criteria defined | | | | than 3% for 2008-1020. The good news that this |
| under the Maastricht Treaty which includes reducing | | | | slow-down will help reduce inflation, particularly as |
| their budget deficit to no more than 3% of GDP. As | | | | energy costs decline. (OECD Economic Outlook). The |
| a result, the Czech government is encouraged to | | | | nation's major economic partner is Germany, both for |
| reduce its debt through various programs including | | | | export and supply. Economic conditions in Germany |
| further privatization. Additional requirements of the | | | | impact the Czech Republic, as do currency |
| Maastricht Treaty, such as controlled inflation and | | | | fluctuations between the Koruna and the Euro. |
| reduction of national debt, create prime opportunities | | | | Monetary Policy |
| for entrepreneurs who can take over the | | | | The Czech Republic plans to work towards moving |
| government's role in business and social programs. | | | | currency to the Euro as part of the nation's |
| Joining the EU will facilitate the adoption of trade | | | | economic strategy, with the earliest possible entry in |
| standards accepted by other EU countries (i.e. | | | | 2012. Joining the EU currency will limit exchange rate |
| ISO9000, labeling practices, licensing, etc), moving | | | | risk for entrepreneurs, and improve comparability to |
| them towards economic integration. | | | | other firms thereby increasing the availability of |
| However, the government may institute other | | | | investment capital for the nation. However, there are |
| programs to reduce debt, such as in increase in the | | | | risks associated with moving to the Euro. Larger |
| value-added tax, which is 19% on most goods. | | | | economies in the EU (such as France and Germany) |
| The country maintains a free market and a generally | | | | will have a greater influence on the currency, and as |
| open economy with little barriers to trade and | | | | such the value can become disconnected from local |
| investment and is a member of the Central European | | | | economic conditions, impacting inflation and |
| Free Trade Association (CEFTA). The Czech Republic | | | | international competitiveness. |
| experienced 4.4% growth in their GDP in 2004, and | | | | Government |
| the first quarter of 2005 ended with 4.3% growth. | | | | Recent focused changes in regulatory policy were |
| This growth is largely a result of their strong foreign | | | | designed to encourage entrepreneurship. In 2006, |
| trade, although exports and imports fell during the | | | | major reform was begun to simplify the laws |
| most recent quarter. Foreign Direct Investment (FDI) | | | | affecting small and medium sized enterprises. The |
| almost doubled in 2004 with nearly CZK 115 billion | | | | first step was to simplify the registration process, |
| ($4.6 billion) flowing into the country. The Czech | | | | which can now take place in one day, requires one |
| Republic is one of the most entrepreneurially active | | | | form, and a fairly low fee. The government continues |
| European nations, and the prospects for new | | | | to work on simplifying the labor code to encourage |
| business opportunity continue to improve. | | | | economic openness. |
| Early-stage entrepreneurial activity in the Czech | | | | The government actively encourages |
| Republic is 7.85%, a high rate among European | | | | entrepreneurship, has created policies to facilitate |
| countries, though low compared to emerging | | | | business creation, and makes statistical and funding |
| economies in regions such as Latin America (GEM | | | | information widely available. One such source is the |
| Consortium, 2006). | | | | Entrepreneur's Guide to the Operational Programme |
| The government is taking measures to simplify new | | | | Enterprise. |