Czech Republic: Selected Issues

IMF Staff Country Reports, January 20, 2023

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Czech Republic: Selected Issues

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Bibliographic details

• Published: January 20, 2023
• Series: IMF Staff Country Reports
• DOI: https://doi.org/10.5089/9798400231582.002

Purpose and scope

• Examines, through the lenses of a structural model of global value chains, policies that could smooth the transition to the production of electric vehicles in Czechia economy context.
• Analyzes impacts of a broad set of policies related to:
  • increasing labor productivity,
  • boosting production capabilities in the current set of specialties,
  • moving up the global value chain.
• Investigates the potential impact of a transition to electric vehicles in Europe using a combination of data and modeling techniques.

Key findings on Czechia’s automotive sector

• Czechia automotive sector’s value-added share and skill intensity are comparatively lower in the regional context.
• The paper highlights differences between electric and combustion vehicle production relevant for policy and capability development.

Model description and calibration

• Introduces a stylized structural model of automotive global value chains that includes distinct production of electric and combustion vehicles.
• The model:
  • describes the inter-connectedness of trade,
  • imbeds domestic capability features, including specialization along the global value chain,
  • is calibrated to capture key features of Czechia and Germany’s positions in global value chains,
  • captures key differences between electric and combustion vehicle production.

Policy implications and recommendations

• Policies to consider for smoothing the transition to electric vehicle production in Czechia:
  • measures to increase labor productivity,
  • measures to boost production capabilities within existing specialties,
  • measures to facilitate moving up the global value chain (higher value-added and skill-intensive activities).
• The analysis implies a combination of capability-building and productivity-enhancing policies will be important to manage structural shifts in the automotive sector.

Content in this bundle

• Czech Republic: Selected Issues; IMF Country Report No. 23/32; December 12, 2022
  • Czech Republic: Selected Issues; IMF Country Report No. 23/32; December 12, 2022 (Markdown version)
  • Czech Republic: Selected Issues; IMF Country Report No. 23/32; December 12, 2022 (PDF)