City focus: Prague
Business Chief takes a closer look at the city with one of the finest transportation systems and emerging business hubs in the world: Prague.
The capital city of the Czech Republic, Prague, is the largest city in Czechia. A vibrant city of almost 1.3 million inhabitants, it is also the oldest city in the country. With a surface area of 298 kilometres, it has a population density of 4,600 people per square kilometre, as reported by the European Commission. Prague has a strong cultural heritage. It is home to Prague Castle, the largest ancient castle in the world according to the Guinness Book of World Records. It is also one of 39 UNESCO Creative Cities of Literature, a title held since 2014.
Prague’s economy has been strong since the Czech Republic joined the European Union (EU) in 2004. The most expensive street in Central Europe is in Prague, and the city makes up 25% of the entire country’s Gross Domestic Product (GDP), according to World Population Review. The Eurostat Regional Yearbook 2018 and 2019 designated Prague as one of the most economically developed regions in the EU, with great potential for continued growth. In 2017, Prague had a GDP of €48.8mn. Recently, data from Eurostat placed Prague as the seventh richest region in the EU, with the city’s GDP per capita at 187% the EU average. This prosperity extends to the Czech Republic overall. For the first in history, the country’s GDP per capita overtook Spain’s. Its overall GDP is up 700% since the 1990s, reports Radio Prague International. According to Helena Horská, Chief Economist at Raiffeisenbank, despite the cost of living and inflation, the purchasing power of Czech citizens has also grown two and a half times in the same time period. Prague itself has an extremely high employment rate. With an unemployment rate of only 1.3%, the lowest reported rate across all EU regions in 2018.
Prague’s economy is relatively diverse. Due to operation costs being lower in Prague than in other EU cities, several international companies have based their European headquarters in the city. According to Prague.com, one fifth of all investments made in the Czech Republic occur in Prague. Industrial production is one of Prague’s major economic pillars. Primarily, this is centred around aircraft and diesel engines, electronics, chemicals, food, printing, refined oil products, and cars. This sector has a long history within the wider country. In Austrian-Hungarian time, almost 70% of production was concentrated on Czech territory. Currently, 40% of all working citizens in the Czech Republic, that is 1.4 million employees, work within the industrial sector.
Where the Czech Republic is already home to a historic influx of development, Prague is a hub of research and development (R&D). One fourth of all organisations undergoing R&D are based in Prague. The city accounted for 34.5% of the Czech Republic’s intramural R&D spending in 2016. Prague spends nearly three times the national average per inhabitant on R&D, according to Eurostat. Within the private sector, the city accounts for 65% of all personal performing R&D shares. 683,000 people in Prague work at high-tech companies and almost 60% of inhabitants between the ages of 30 and 34 have obtained post-secondary education. Prague is home to the biggest public university of economics in the country and places 35th on QS rankings for the Best Student Cities worldwide.
In the last decade, particularly, Prague’s private sector has grown phenomenally. The service industry in Prague is highly developed, with 75% of all employed people in the city working within it. While business services have grown, including finances, IT, consulting and advertising, and real estate, tourism is at the heart of Prague’s expanding economy. Between hotels, restaurants, tours, travel agencies, and the influx of actual tourists, the tourism sector contributes almost 60% to Prague’s total income. According to Euromonitor International, Prague is the 22nd most visited city in the world, with over 9.2 million visitors in 2019. Several international hotel chains are looking towards Prague for potential business. Currently, Hyatt Hotels Corporation, Hard Rock Hotels, and Fairmont Hotels & Resorts have all announced plans to build their first properties in Prague in the next few years. The Hyatt 175-room hotel is looking to open in 2022, while Hard Rock plans on debuting its 523 rooms and suites in 2023. The Fairmont project will be the first from the resort chain in the Czech Republic, with a soft opening in 2020 followed by a planned 2022 refurbishment.
A city in transit
Prague’s public transport system is considered one of the best in Europe. Two-thirds of the city’s population relies on it, from trams and buses to the metro. While this system is entrenched in the city’s infrastructure, it has been undergoing a digital transformation to bring it into the modern age. Just last month, it was announced that the city’s public transit passes can now be stored on mobile phones. The PID Líta%u010Dka application, which was launched in 2018, will now allow city-goers to virtually store travel passes. The app has experienced immense popularity since its launch: it is used regularly by over 139,000 people and has been downloaded by 630,000 passengers.
The city is also improving its transport infrastructure. Recently, Prague signed a sister pact with Taipei, set to unify the two cities in January of next year. Once signed, the pact will allow Prague to send students to Taipei to study, among other topics, Taiwan’s metro development. It also launched a public transit shelter prototype. Its design came as a result of a competition promoted last year by the Prague Institute of Planning and Development. The prototype’s design includes screens on three sides to protect people from the elements, as well as an information panel that updates passengers of tram and bus arrival, USB ports, Wi-Fi, and a speaker for the hearing impaired. The city has been on a mission to unify urban furniture since 2017, when it began seeking for alternate designs for rubbish bins, cycle, racks, and benches.
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