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Strategická průmyslová zóna Holešov

Petr ZahradníkHead of EU Office Česká spořitelna

Holešov Industrial Zone

Analysing the impacts in a broadereconomic and regional context

Petr Zahradník and Jan Jedlička

April 2010

Parameters applicablein the long term

• One of the key factors in the unprecedented economic prosperity of this decade: a targeted motivating investment incentive policy attracting hundreds of leading global and European corporations to the Czech Republic;

• Despite significant qualitative changes (from large-scale processing industry to more sophisticated services, a change in policy approaches to incentives, major impact of the crisis) targeted investment incentives remain legitimate and justified;

• Without rational and sound investment no sound economic development creating jobs and promoting competitiveness would be possible in the long term

• Significant enhancement of growth performance and achievement of long-term economic prosperity;

• Improving the competitive position of the country and its regions;

• Crucial creation of new, mainly qualified, jobs;

• Positive change in the balance of trade, improving its commodity and territorial structure in terms of more ambition and more emphasis on quality;

• Key contribution to ongoing structural changes

Long-term effects

Impact of the economic crisis

• Global and European economies, including the Czech Republic and the Zlín Region, have seen a dramatic decrease in real economic performance affecting all its components, including investment (in the EU -18% y-o-y, in the Czech Republic more than 8% in 2009);

• Devastating effect on labour markets, as well as the state of and outlook for public finances, possibly holding back the recovery process;

• Czech Republic: capacity issues; before the crisis – enormous rate of investment; is all the investment usable?; encouraging factor: further expansion of exports and incentives for mainly Asian investors to operate on the EU‘s single internal market

Impact of the economic crisisEU – Czech Republic – Zlín Region

in % Q1/2009 Q2/2009 Q3/2009 Q4/2009 2009

q-o-q- GDP data -4.1 -0.3 +0.6 +0.7 -

y-o-y GDP data -4.0 -4.9 -4.5 -3.1 -4.1

Czech GDP in 2009

in % 2006 2007 2008 2009 2010e

EU +3.1 +2.9 +0.9 -4.1 +0.7

Czech Republic +7.0 +6.1 +2.3 -4.1 +1.3

Zlín Region +8.8 +6.7 +1.7 -4.5e +1.6

EU, CR and Zlín Region GDP in 2009

Key parameters of the ZlínRegion’s economic development

• Crucial structural changes in the economy during the past 20 years (factual extinction of two key processing industries: shoemaking and aviation);

• GDP per capita (10th place out of 14 regions of the Czech Republic);

• Very dynamic growth since 2000 → a typical convergence region, capable of sustaining long-term, above-average economic growth;

• Relatively favourable long-term unemployment data in both national and European context, but… (10.8% at the end of 2009 and 11.4% at the end of Q1 2010 !!!); in times of prosperity, long-term average below 8%

Key parameters of the ZlínRegion’s economic development

• Changing demographic conditions (peak of prosperity → population growth, both natural and through migration, now population in decline); visible ageing process; region with high social cohesion

• Persisting investment underdevelopment (even in times of prosperity, investment per capita was only at 3/5 of the Czech Republic’s average) → strong investment need, no excess capacities created;

• Strong business base, especially in the SME sector; long tradition of expansive and innovative enterprise – Baťa – one of the best known multinationals, founded in the Czech Republic;

• Motto and objective: find a new Baťa !!!

Key parameters of the ZlínRegion’s economic development

in % 2004 2005 2006 2007 2008

Zlín Region GDP per capita

(CR = 100)79.6 80.7 81.5 81.8 80.9

Zlín Region GDP per capita

(EU = 100)60.4 62.3 63.3 65.7 64.8

Zlín Region GDP

(CR = 100)4.6 4.7 4.7 4.7 4.6

Czech GDP in 2009

• Competitive economy

– promoting the application of outcomes from R&D and innovation projects;

– strengthening the role of the services sector in the region’s economy;

– strengthening the role of SME’s;

– maintaining competitiveness in dominant industries: chemical, rubber and plastics industries, metallurgy, electrical engineering, food industry → main task of the Holešov Industrial Zone

Priority areas for future economic development of the Zlín Region

Strategy for 2020 and Development Programme for 2012:

• Successful society– increasing the competitiveness of the workforce in a knowledge-

based economy (lifelong learning, languages); – reducing unemployment rate to achieve a natural rate; – enhancing the efficiency of health and social services

• Efficient infrastructure and rural development– improving environmental parameters; – making rural life more attractive through diversifying activities in rural areas; – increasing the region’s importance as an inter-regional transport destination and developing the public transport system

• Attractive region – attracting more visitors and improving the use of tourism capacities; – promoting awareness about the region as a tourist destination; – preserving the region’s cultural heritage

Priority areas for future economic development of the Zlín Region

Assessing the position of Holešovin terms of development needs

• Development Programme for 2012: a test to determine how individual subregions (13) of the Zlín Region fulfil their development priorities;

• Based on objective analysis, excellent result for the Holešov subregion : second place overall; relative ranking almost 10% above regional average;

• Dominant position mainly due to excellent transport infrastructure, links to public transport networks, competitive economic parameters (in terms of business environment and relatively favourable labour market situation), and demographic conditions

Assessing the position of Holešovin terms of development needs

Holešov – position in the regionOVERALL 2nd*

Demography 4th

Competitive economy 3rd

Successful society 6th

Efficient infrastructure and rural development

2nd

Attractive region 10th

*(9.8% above regional average), source: Zlín Region Development Programme for 2009-2012

Holešov’s position in the region in terms of development needs

• scheduled start of production and investment (of total capacity):

• period observed: 2010 – 2015

• impacts observed: on the CR as a whole + on the Zlín Region

• estimated macroeconomic parameters (until 2012 under the Convergence Programme of the CR):

• distribution of investments: 1/3 construction, 2/3 technology

Macroeconomic model of impacts (1)

Basic assumptions of the macroeconomic model

2010

2011

2012

2013

2014

2015

start of production 2% 20% 55% 70% 85% 100%

start of investment 5% 35% 30% 15% 15% 0%

CR; in % 2010 2011 2012 2013 2014 2015

real GDP growth 1.3 2.6 3.8 4.0 4.0 4.0

GDP deflator 0.6 1.0 1.5 2.0 2.0 2.0

unemployment rate 10.8 10.1 8.6 7.0 6.5 6.0

public debt/GDP -5.3 -4.8 -4.2 -3.0 -2.5 -2.0

• jobs distribution:

• distribution of investors by sector: according to the sectors’ role in the economy (performance) + 3 times more chemical, plastics and aviation industry

• usable area for investors = 280 ha

METHODOLOGY OUTLINE:

zone area → investment +

jobs → performance +

GVA (GDP) + profit

+ export/import performance

Macroeconomic model of impacts (2)

Basic assumptions of the macroeconomic model

18.2%

Vehicle manufacturing

13.5%

Chemical and pharmaceutical industry

13.4%

Rubber and plastics industry

12.1%

Electrical and optical equipment manufacturing

12.1%

Metallurgy and metal-working industry

7.5% Food and tobacco industry

7.3% Machinery and equipment manufacturing

3.7% Glass, ceramics, china and building materials

3.1% Paper and printing industry

2.9% Coking and oil refining

2.7% Processing industry not listed elsewhere

1.8% Wood processing industry

1.7% Textile and clothing industry

0.1% Leather industry

CI data

ratio indicators

ZR citizens Others - CR Foreigners

60% 25% 15%

• first effects in 2010 (construction + production), main effects from 2011-12

• whole 2010-2015 period - GDP increase by CZK 151.9 billion with a potential

• in 2015 GDP 0.88% higher and growth 0.05 pp faster

Impact on Czech GDP

2009 2015without the Holešov ZoneGDP market prices in bil. CZK 3,630 4,822real GDP growth -4.10% 4.00%with the Holešov Zone

HDP market prices in bil.CZK 3,630 4,864

nom. GDP increase in bil. CZK 0.00% 0.88%

real GDP growth -4.10% 4.05%

Macroeconomic model of impacts (3)

Navýšení HDP v ČR při realizaci SPZ Holešov

0,0%

0,2%

0,4%

0,6%

0,8%

1,0%

2009 2010 2011 2012 2013 2014 20150

10

20

30

40

50mld. Kč

Meziroční reálný růst HDP v ČR

-4%

-2%

0%

2%

4%

6%

2009 2010 2011 2012 2013 2014 2015

bez SPZ Holešov se SPZ Holešov

Czech GDP increase with the Holešov Zone

Y-o-y real GDP growth in the Czech Republic

without Holešov with Holešov

• first effects in 2010 (construction + production), main effects from 2011-12

• over the 2010-2015 period - GDP increase by CZK 75.4 billion with a potential

• in 2015 GDP 10.13% higher (!) and growth 1.01 pp faster

Impact on the Zlín Region’s GDP

2009 2015without the Holešov ZoneGDP market prices in bil. CZK 167 225real GDP growth -4.50% 4.00%with the Holešov ZoneHDP market prices in bil. CZK 167 248nom. GDP increase in bil. CZK 0.00% 10.13%

real GDP growth -4.50% 5.01%

Macroeconomic model of impacts (4)

Navýšení HDP v ZK při realizaci SPZ Holešov

0%

3%

6%

9%

12%

2009 2010 2011 2012 2013 2014 20150

5

10

15

20

25

mld. Kč

Meziroční reálný růst HDP ve Zlínském kraji

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

2009 2010 2011 2012 2013 2014 2015

bez SPZ Holešov

se SPZ Holešov

Zlín Region GDP increase with Holešov Zone

Y-o-y real GDP growth in the Zlín Region

with Holešov

without Holešov

• first effects in 2010 (construction + production), main effects from 2011-2012

• in target year 2015 41 713 new jobs with a potential

• in 2015 unemployment rate 0.73 pp lower, at 5.27%

Impact on employment in the CR

2009 2015without the Holešov Zoneno. unemployed 527,728 342,515unemployment rate 9.24 % 6.00 %with the Holešov Zoneno. unemployed 527,728 300,802new jobs 0 41 713

unemployment rate 9.24 % 5.27 %

Macroeconomic model of impacts (5)

Míra nezaměstnanosti v ČR

0%

2%

4%

6%

8%

10%

12%

2009 2010 2011 2012 2013 2014 20150

10

20

30

40

50

nová pracovní místa (pravá osa)míra nezaměstnanosti bez SPZ Holešov (levá osa)míra nezaměstnanosti se SPZ Holešov (levá osa)

v tis.

Unemployment rate in the Czech Republicnew jobs (right axis)

unemployment rate without Holešov (left axis)

unemployment rate with Holešov (left axis)

• first effects in 2010 (construction + production), main effects from 2011-2012

• in target year 2015 15 499 new jobs with a potential

• in 2015 unemployment rate 6.36 pp lower, at 1.24 %

Impact on employment in the Zlín Region

2009 2015without the Holešov Zoneno. unemployed 33,136 19,300unemployment rate 10.83 % 7.60 %with the Holešov Zoneno. unemployed 33,136 3,801new jobs 0 15 499

unemployment rate 10.83 % 1.24 %

Macroeconomic model of impacts (6)

Míra nezaměstnanosti ve Zlínském kraji

0%

2%

4%

6%

8%

10%

12%

14%

2009 2010 2011 2012 2013 2014 20150

4

8

12

16

20

nová pracovní místa (pravá osa)míra nezaměstnanosti bez SPZ Holešov (levá osa)míra nezaměstnanosti se SPZ Holešov (levá osa)

v tis.

Unemployment rate in the Zlín Regionnew jobs (right axis)

unemployment rate without Holešov (left axis)

unemployment rate with Holešov (left axis)

• over the 2010-2015 period – improvement of PF by CZK 55.4 billion with a potential

• in 2015 State budget deficit CZK 15.5 billion lower (0.34 pp GDP)

• greatest effect health insurance and social security, unemployment benefits; partly also individual income tax, corporate income tax, VAT

Impact on Czech public finances

2009 2015

without the Holešov Zone

bud. deficit in bil. CZK -239.6 -96.4

bud. deficit in % GDP -6.6 % -2.0 %

with the Holešov Zone

bud. deficit in bil. CZK - 239.6 -80.9

bud. improvement in bil. CZK 0.0 15.5

bud. deficit in % GDP -6.6 % -1.7 %

Macroeconomic model of impacts (7)

Deficit veřejných financí v ČR v poměru k HDP

-7%

-6%

-5%

-4%

-3%

-2%

-1%

0%

2009 2010 2011 2012 2013 2014 2015+0

+4

+8

+12

+16

+20změna veřejných financí (pravá osa)bez SPZ Holešov (levá osa)se SPZ Holešov (levá osa)

mld. Kč

Czech public finances deficit / GDP ratio

public finances change (right axis)

without Holešov (left axis)

with Holešov (left axis)

1. Public finances in the Zlín Region

• increased revenue – shared taxes (VAT, individual and corporate tax)

• over the period of 2010-2015 – revenue growth by CZK 69.7 million, with potential

2. Balance of trade of the CR

• increasing surplus of BOT

• over the period of 2010-2015 – surplus increase by CZK 26.3 billion with a potential

3. GDP structure change in CR and ZR

• stronger industry vs. other sectors

Other relevant macroeconomic effects

Macroeconomic model of impacts (8)

Zvýšení výnosů sdílených daní pro Zlínský kraj

0

4

8

12

16

20

24

2009 2010 2011 2012 2013 2014 2015

se SPZ Holešovmil. Kč

Saldo zahraničního obchodu v ČR (mld. Kč)

0

40

80

120

160

200

240

2009 2010 2011 2012 2013 2014 2015-1

+1

+3

+5

+7

+9

+11změna obchodní bilance (pravá osa)

bez SPZ Holešov (levá osa)

se SPZ Holešov (levá osa)

Revenue increase in the Zlín Region – shared taxes

with Holešov

Balance of foreign trade in CR (in billions of CZK)balance of trade change (right axis)

without Holešov (left axis)

with Holešov (left axis)

Petr Zahradník pzahradnik@email.cz

Jan Jedlička janjedli@seznam.cz

Thank you for you attention

Conclusion