Structural Transitions to Electric Vehicle Production: Czech Republic

Selected Issues Papers, February 28, 2023

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Canonical URL: Structural Transitions to Electric Vehicle Production: Czech Republic

Sustaining the impressive convergence gains allowed by the Czech automotive sector has become challenging due to its comparatively lower value added, lower investments in research and development, and lower skills in the labor market.
Using a structural model of global value chains, the paper examines policies to smooth the transition to the production of electric vehicles in Czechia.
The analysis explores the impacts of increasing labor productivity, boosting production capabilities, and moving up the global value chain.
These policies were found to have a relatively lower impact when they shift specialization towards lower value-added stages of production.

Methodology: structural model of global value chains.
Policy levers analyzed:
- Increasing labor productivity.
- Boosting production capabilities.
- Moving up the global value chain (shifting specialization toward higher value-added stages).

Emphasize policies that raise labor productivity to smooth the transition to electric vehicle production.
Strengthen investments in research and development to support higher value-added activities.
Improve labor market skills to enable movement up the global value chain and capture greater value added.
Avoid policy shifts that result in specialization toward lower value-added stages, as these have a relatively lower impact on sustaining convergence gains.

Subject: Employment, Global value chains, Globalization, International organization, Labor, Labor productivity, Monetary policy, Production, Skilled labor
Keywords: Automotive industry, Convergence, Czech Republic, Czechia economy, electric vehicle production, Electric vehicles, Employment, Global, Global value chains, Labor productivity, model illustration, Policy recommendation, production capability, Skilled labor, Structural Policy