Business Czech regions and cities score in ranking of foreign investment locations but fail in European contest

13-03-2014 14:46 | Chris Johnstone

Czech regions and cities have scored well in rankings of East European regional destinations for foreign direct investment. But in the overall European categories, quality rather than cost effectiveness put more expensive Western locations in pole position.

Illustrative photo: CTKIllustrative photo: CTK Czech regions, Pardubice, Plzeň, and Prague respectively, occupied the first three places in a ranking of East European cities and regions of the future according to a biennial survey carried out by the Financial Times publication fDintelligence, which is focused on trends in inward investment. The awards were announced on March 12.

The Czech regions were followed by the Central Federal District of Russia; Malopolska, Metropolis Silesia, Wielkopolska, and the Masovian district, all in Poland; and Bucharest-Ilfov, Romania, and Bratislava, Slovakia. Pardubice was also placed third and Plzeň first in a ranking of the East European regions for their foreign direct investment strategy.

In the city category, Plzeň was the best placed Czech location in fourth position, trailing Budapest, Wroclaw, and Katowice, in the Eastern cities of the future category. Brno came in sixth place, Ostrava eighth and Prague tenth. Fourth, sixth, and seventh places were awarded to Ostrava, Plzeň, and Brno for their FDI strategies. Prague was sited fifth in a ranking of the cost effectiveness of major cities, behind Sofia, Tbilisi, Bucharest and Belgrade, and ninth for business friendliness.

The rankings are based on population size and the amount of foreign investment attracted over the previous two years for which data was available. Czech state agency for attracting foreign investment, CzechInvest, said in a statement that the various tables are used by foreign investors to help hone their location options and final choices of sites.

Commenting specifically on the Pardubice region’s success, provisional agency director Ondřej Votruba, said that it could expect increased interest going forward. CzechInvest said that it helped attract more than 5 billion crowns of foreign investment to the region last year with 584 jobs likely to result.

Factors picked out in the region’s favour were plans to link it to the D11 motorway heading out of Prague to Hradec Králové and onwards towards the Polish frontier; plans to expand the local university through the addition of a center for transfer of technology and know-how, development of the chemical technology faculty, and increased mobility of students at the University of Pardubice.

But the wider picture for Czech cities and regions and the whole of Eastern Europe is not so rosy according to the survey. While Eastern Europe inevitably scored well on cost effectiveness compared with more expensive Western cities, they lost ground in many other areas where quality was more important than cost.

London, followed by Helsinki and Eindhoven were selected as the top European cities overall for foreign investment. Not one city from Central and Eastern Europe made it into the top 25. In the regional race, Germany’s North Rhine Westphalia, centered on Dusseldorf, came top, followed by Scotland and the Copenhagen region. In rankings for infrastructure, FDI, strategy, and business friendliness, Central and Eastern European regions were also absent from the European top 10.

Despite being frequently rated as one of the most expensive cities in the world, London scored high for its ability to attract IT and software, and financial services investments. A massive new rail investment, cross rail, which includes 73 miles of new tunnels and over ground routes linking London and its suburbs, also helped it score highly.

Britain and Germany have long been the dominant targets for foreign direct investment in Europe with the former leading in the services sector and the latter leading in manufacturing projects. According to another survey by the EY agency, Poland overtook Russia in 2012 as the biggest destination for foreign investment in Central and Eastern Europe.

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