As part of the former Czechoslovakia, the country was under the influence of the Soviet authority from the end of the Second World War until the collapse of the Soviet Union in 1989. Shortly after that, on 1 January 1993, the Czech Republic was formed with the peaceful division of Czechoslovakia into its two national components.

The country has undergone dramatic changes over the last decade, transforming itself from a communist state to a free market orientated Western-style democracy. In 1995 the Czech Republic became a member of the Organisation for Economic Co-operation and Development, in 1999 it joined NATO and on 1st May 2004 the country became a full member of the European Union.

Economy:
According to figures published by the OECD, the service sector accounted for 54.5 per cent of the Czech Republic's GDP in 2000, industry accounted for a further 41.4 per cent and agriculture made up the rest. The service sector is becoming increasingly important as the country is playing host to a growing number of regional headquarters and distribution centres, research and development facilities and customer-oriented services such as call centres. Since 1989, the Czech Republic has restructured and diversified its manufacturing industry. Some of the country's most up and coming industries include the automotive industry, electronics, life sciences, plastics and precision engineering.

With the exception of a slight recession in 1997 and 1998, the Czech economy has grown steadily since the country's formation. Figures published by the Czech Statistical Office, show the country's GDP grew by more than 3 per cent in 2000 and 2001 and by 2 per cent in 2002. According to the OECD, the country's GDP stood at just under $70 billion US in 2002.

The high levels of foreign direct investment (FDI) the Czech Republic receives have largely fuelled growth in the economy. Figures from the national development agency, Czech Invest, show that $6.3 billion US was invested in 1999, $5.6 billion in 2001 and over $9.3 billion in 2002.

Infrastructure:
The Czech Republic has one of the best transport networks in Central and Eastern Europe. Figures for 2000 from the Ministry of Transport and Communications show that the density of the country's motorways and railways, at 6.3 and 120 kilometres per 1000 kilometres square respectively, far exceeds that of countries such as Hungary, Poland and Slovakia. In addition, the government, together with private investors, is continuing to invest heavily in developing the transport infrastructure further. For example, there are plans to double the motorway network to over 1,000 kilometres by the year 2010 and work to improve the quality of roads at border crossings has already begun. Modernisation and development of the railway network is also underway and will include the construction of high-speed international links with numerous European countries such as Germany, Austria and Poland.

The country has several international airports. However, most are small, catering for relatively few passengers each year and offering flights to and from a limited number of destinations. Prague's Ruzyne airport is the Czech Republic's principal airport catering for the vast majority of the country's total passenger and freight traffic. The airport is situated 10 kilometres outside Prague and is one of Europe's most modern airports catering for over 50 airlines, which together flights to and from more than 100 destinations in Europe, the US Canada and the Near East.

The Labe waterway links the Czech Republic with Europe, stretching from Chvaletice to the German border.

Workforce:
The Czech Republic benefits from a well educated labour force, ensuring companies operating in the country have access to high calibre employees. Some 86 per cent of the Czech labour force, aged between 24 and 64, has completed higher secondary education compared to an average of 64 per cent for OECD member countries. Furthermore, according to the Global Information Technology report 2003, produced by the World Economic Forum, the quality of mathematics and science education in the Czech Republic is the second best in the world after Singapore. OECD figures also show the country produces approximately 14,000 graduates in scientific and technical subjects each year.

According to figures for 2001 published by Eurobarometer, language skills in the Czech Republic are better than in many Central European countries. For example, some 45 per cent of people in the Czech Republic can participate in a conversation in a major Western European language such as English, Spanish, French, German and Italian. This compares to 33 per cent in Poland, 29 per cent in Slovakia and 25 per cent in Hungary.

The country also has one of the most industrious workforces in the world. The World Competitiveness Yearbook 2002 shows that the average number of hours work per year by employees in the Czech Republic was higher in the than in many other countries including the USA, Poland, Japan, Sweden, Switzerland, the UK, Ireland, Italy, Norway, Spain, Germany, the Netherlands and France.

New Technology:
The Czech government is committed to upgrading and expanding the telecommunications network and IT infrastructure in order to enable businesses to operate more efficiently. Figures published by the European Information Technology Observatory 2003, show that spending on information technology in the Czech Republic totals some 4 per cent of GDP, well above the levels of nearby countries such as Hungary (3.2 per cent), Poland (2.1 per cent), Slovenia (2.4 per cent) and Bulgaria (2.1 per cent).

The country also provides an excellent research environment, which has encouraged numerous international companies to establish Research and Development or Design Centres. These include companies such as Honeywell, Ericsson and Hewlett-Packard, Mercedes-Benz and Panasonic.

Business Costs:
The Czech government has introduced programs such as the Framework Program for Support of Strategic Services Projects and the Framework Program for Support of Establishment and Expansion of Technology Centres, which provide companies with numerous financial incentives. These include training subsidies and subsidies covering up to 50 percent of certain business expenses, such as wage costs and capital expenditures into buildings, machinery and equipment.
Average wage rates in the country are also very competitive. According to Czech Invest, salaries in the Czech Republic are lower at most key skill levels than in other central European countries such as Hungary and Poland.