Czech Republic shoots for the future with investments in innovation

Expenditures on research and development in the Czech Republic hit record levels last year.

 William Nattrass

Written by William Nattrass Published on 22.10.2021 14:25 (updated on 22.10.2021) Reading time: 2 minutes

Developing the technologies of the future is a vital way for countries to ensure long-term economic prosperity. In a world where business practices can change in a matter of years, a strong emphasis on innovation can help keep local manufacturers and businesses ahead of the curve.

The Czech Republic is therefore focusing more than ever on investing into research and development. Investments into innovation projects rose to a record high of CZK 113.4 billion last year, according to new data from the Czech Statistical Office.

Expenditures on R&D have grown rapidly over recent years, although growth has slowed of late due to the impact of the Covid pandemic. Last year’s figure was an increase of CZK 1.8 billion on 2019, or less than 2 percent growth. From 2016 until the pandemic, annual increases were over 10 percent.

Still, in 2020, R&D expenditures were worth 1.99 percent of GDP, the highest share in the Czech Republic’s history, and the tenth highest level in the EU.

Increased expenditures are a way for the Czech Republic to try to catch up with some of the world’s most advanced economies, which spend high proportions of their national income on innovation. The highest spender is Israel, with an almost 5 percent share, followed by South Korea with 4.5 percent, and Taiwan with 3.5 percent.

Unsurprisingly, the majority of innovation expenditure is coming from the business sector, which stands to benefit most from leadership in developing new technologies. Businesses spent CZK 66.1 billion on R&D, compared to CZK 24.5 billion spent on university research. Some of the biggest innovation spenders are foreign companies: out 26 companies spending over CZK 500 million, 21 are controlled by foreign owners.

Unsurprisingly, most R&D spending is focused in Prague. Women make up 30 percent of employees working in research and development; a disproportionately low number, but higher overall than in specific categories such as IT. Foreigners make up around a tenth of the total number of employees working in innovation, with almost half coming from Slovakia.

The automotive sector is a major recipient of R&D funds. The industry is subject to continuous technological improvements, and given the size of the Czech car industry, such innovation is of particular importance to the domestic economy. The sector is also seeking out foreign innovations, with a trade delegation from Taiwan set to visit Prague for meetings focusing on high-tech cooperation this weekend.

Yet through investments in domestic research and development projects, the Czech Republic could become a world leader in its own right. By boosting the activities of local companies and also creating opportunities for selling high-tech products abroad, attempts to make the country an innovation powerhouse could prove crucial to future prosperity.

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