While the recession threaten the Czech Republic, the Government shall review the public finances and reforms in place before the crisis hits the country. In this context, the Ministry of Industry and Commerce  has recently proposed an amendment to the law granting incentives to companies and foreign investors.

The amendment, approved in late January 2009 by Parliament, removes these mechanisms to manufacturing, and replace them with specific support for research, R & D and technology. The objective is to support projects with high added value, with significant potential for export. The original legislation, which dates from 1998 and has undergone several amendments, was to

stimulate foreign direct investment (FDI) and boost employment. Following its adoption, the Czech Invest Agency  was created to attract investment and encourage entrepreneurship.

The Department has commissioned a study to the Economic University of Prague on the effects of these incentives on Czech economic growth. The study showed a large regional disparity in the allocation of such aid, which received mostly to companies located in regions where GDP is the highest (Prague and Central Bohemia). For the program was ineffective in the fight against the regional imbalance in employment. Even more telling, it shows that the cost associated with the creation of jobs often exceeds the limit of 1.6 MKC (57 K euros), sometimes reaching more than 10 times that threshold! So many companies have benefited from the incentives have not been, or are not able to "reimburse the state", particularly in terms of jobs.

Support for technological sectors, seen as more sophisticated, is seen as to help increase competitiveness and promote economic development.

Source: http://www.praguepost.cz