The Czech Republic's Economic Miracle
December 14, 1995
The Czech Republic -- part of the former Czechoslovakia -- swiftly transformed its economy using free market ideas after breaking away from the former Communist bloc six years ago. Now its people are enjoying those material benefits which come to capitalistic nations.
- Citizens of the Czech Republic enjoy the lowest unemployment rate in Europe: 2.9 percent.
- This compares with an average rate of 13 percent among Eastern Europe's formerly Communist states.
- Two weeks ago, it became a member of the Organization for Economic Cooperation and Development -- the official wealthy nations' club.
- After its gross domestic product shrank 6.4 percent in 1992, the country got on the growth track with increases of 2.6 percent in 1994 and about 5 percent this year.
- Expectations are for growth between 4.5 and 6.5 percent next year.
- Industrial output has leaped from a minus 11.7 percent in 1992 to a projected 6 percent next year.
- Inflation has fallen from 18 percent in 1993 to an estimated 10 percent this year.
- Tariffs on imports are a low 5 percent.
On the negative side, taxes are still very high. Otherwise, the Czech Republic presents a model to other countries emerging from economic dictatorships: cut trade barriers, deregulate, encourage competition, let markets set wages and prices, keep currency stable and get the heavy hand of government out of the economy.
Source: Perspective, "A Tiger in Europe?" Investor's Business Daily, December 14, 1995.
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