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prague
Giuseppe Arcimboldo, Fruit Basket. Wikimedia Commons.

Prague...

NYU-New Presence Journalism intern.

Once a sprawling city of Europe, Prague became the capital of the Holy Roman Empire during the reign of Charles IV in 1355.The city was thriving with scholars from around the world studying at Charles University, with merchants trading in medieval Europe’s biggest town square.

Today, Prague is one of the most visited European cities with an estimated 5.5 million visitors in 2015. However, Prague is ranked #63 in the Global Financial Centres Index (GFCI), in terms of competitiveness, development, and reputation as a financial center.

Prague has the lowest unemployment rate in Europe and is located in the heart of Europe. With a prime location connected to influential financial cities, Prague is the ideal city to set up regional headquarters for Central Europe. What happened to the once great capital of the Holy Roman Empire, and should Prague regain its financial status?

Though at the center of Europe, Prague is surrounded by strong economic and service centers, specifically Zurich, Vienna, Warsaw, and Frankfurt, each with its own strengths. Zurich is home to financial and banking giants, with an additional appeal of low tax rates. Vienna has a strong service sector, containing 75% of its employed workers, and houses branches of large t Research & Development and Information Technologies firms. Warsaw is a major industrial center and home of the Warsaw Stock Exchange, the largest stock exchange in Eastern Europe. Frankfurt is a global city with one of the world’s most important central banks (European Central Bank), the third largest European stock exchange (Frankfurt Stock Exchange), and the third-largest exhibition site in the world (Frankfurt Trade Fair).

The Global Financial Centres Index (September 2015)

Ranking

City

Rating

1

London

796

2

New York City

788

3

Hong Kong

755

7

Zurich

715

14

Frankfurt

706

30

Vienna

674

38

Warsaw

663

63

Prague

623

Criteria for Ratings: "business environment", "financial sector development", "infrastructure factors", "human capital", "reputation and general factors"

The close distance from Prague to higher performing financial cities has led to the brain drain phenomenon, with highly educated and qualified Czech workers moving to nearby countries for higher wages and more opportunities. Tomas Klvana, former Press Spokesperson and Policy Adviser for the President of the Czech Republic, notes that “countries around the Czech Republic, like Poland, Ukraine, and Russia, have larger job markets, which makes them more attractive for businesses. And countries, such as Germany and Switzerland, are more integrated with Western culture, which is attractive for more Western businesses.”

Another large obstacle to economic investment may be Czec h politics, starting with the controversial views of the country’s current president, Miloš Zeman. Zeman is notorious for his anti-Islam rhetoric and anti-immigration stance. Separately, the Czech Republic’s immigration policies have become increasingly restrictive, with fewer number of visas granted and a lengthy visa-granting process in place. In addition, only 27% of the Czech Republic speak English. The percentage of English speakers in the top 4 countries on GFCI are all close or above 50%. Such a language barrier, along with anti-immigration attitudes, create a difficult environment for immigrants to move to the Czech Republic, in which it hinders Prague’s financial growth.

Singapore represents a small country that utilized multiculturalism to transform itself. Lee Kuan Yew, often known as the founding father of independent Singapore, guided Singapore as a Third World country into the First World, with his focus on multiculturalism with racial consciousness. In Singapore, there are strict laws against racial and religious insensitivity. Focus on English in education has also made Singaporeans one of the best English-speaking countries in Asia. In addition, Lee recognized foreign investments as the best way to boost the economy and encourage the establishment of multinational corporations. Today, Singapore is ranked 4th in the GFCI. The transition of Singapore is indicative of the possibility to transform a country into a world powerhouse; however, acceptance of cultural and religious diversity plays a crucial part in the country’s development.

Finally, there is the issue of corruption. In the Czech Republic, 73% of the population considers the political parties to be “corrupt” or “extremely corrupt, ” while 80% of companies view bribery as a common business practice. The country consistently ranks among the highest in terms of corruption levels in Europe. A free market with every member is on the same playing field strengthens the economy, but when economic resources are tied to political control, and economic institutions are structured for self-interest, societies and economies suffer. Today, corruption represents the biggest reversible barrier that prevents Prague from improving its economic status.

 

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