Working Paper Series Serie 6 Spaces, Territories and Regions Paper No. 6.06.03 Case Study Report: Prague Metropolitan Region Martin Ferry* *European Policies Research Centre, University of Strathclyde 2014 www.grincoh.eu This paper was funded under the FP7 project “Growth– Innovation – Competitiveness: Fostering Cohesion in Central and Eastern Europe (GRINCOH)” under the Programme SSH.2011.2.2-1: Addressing cohesion challenges in Central and Eastern Europe; Area 8.2.2 Regional, territorial and social cohesion. Project Nr. 290657 Martin Ferry, [email protected] European Policies Research Centre, University of Strathclyde www.eprc.strath.ac.uk Ferry M., (2014), ‘Case Study Report: Prague Metropolitan Region’, GRINCOH Working Paper Series, Paper No. 6.06.03 Case Study Report: Prague Metropolitan Region Content 1. Introduction ........................................................................................................................ 2 2. Trajectories of economic development and structural change, social cohesion ............. 10 3. Development factors ........................................................................................................ 15 4. Governance and local/regional development policies ..................................................... 18 5. External interventions: national policies and EU cohesion policy .................................... 21 6. Future prospects ............................................................................................................... 23 7. Conclusions ....................................................................................................................... 25 Annex: list of interviewees ....................................................................................................... 27 Appendix ................................................................................................................................... 28 1 1. Introduction Prague dominates the settlement and regional system in the Czech Republic. The city accounts for 12% of the country’s population, 15% of jobs and over 25% of the GDP.1 The region is defined by the exact boundaries of the city and does not include its close surroundings: Prague has special status, as both a municipality and as a region, enclosed by the region of Central Bohemia. 1.1. History and location Prague has a favourable position with respect to the neighbouring states; it is located at a distance of 120 km from the borders of Germany and Poland, 150 km from Austria and about 250 km from Slovakia.2 Prague is at the centre of the Central Bohemia region. It extends over an area of 496 sq. km, which is 0.6% of the area of the CR. Prague has a very varied topography. The inner city is located in the large valley of the Vltava River, which divides it into two sections. The outer city is spread out over the surrounding elevated plateau. The altitude differences between the various areas of the city make transport solutions and other line constructions more challenging. The central bodies of the public and private sectors are clustered there, as are the offices of Czech and foreign companies. The outer city is the location for new residential developments and the development of commercial and logistic centres. One third of the area of Prague is covered by greenery. One tenth of the city's territory is utilised for residential development. 1.2. Basic socio-economic characteristics Economic development In terms of GDP per capita, Prague significantly outperforms the EU average and dominates other Czech regions including other metropolitan regions (see Table 1).3 Prague is one of the most- developed EU NUTS 2 regions according to GDP per capita (173 percent of the EU27 average in 2011). The dominance of Prague has strengthened significantly during transition, and no other Czech region has improved its relative economic standing to a similar extent. According to data from the Czech statistical Office, in 2013 Prague accounted for over 25% of national GDP. Basic features of the economic development of Prague are the strengthening of the service sector and the decreasing share of productive industries in gross value added: the service sector now represents more than 80% of the total gross value added in Prague. This is reflected in employment data. In 2009, 80% of all employed in Prague worked in services. In contrast, the share of industrial sector in creation of value added and employment is much lower than the national average. Industry as a branch does not have such an important position in Prague as in other regions of the Czech Republic. A crucial branch for Prague’s economy is tourism. Prague has become a favourite 1 POLYCE (2012) Metropolisation and Polycentric Development in Central Europe Targeted Analysis 2013/2/12 2 City of Prague (2007) Operational Programme Prague – Competitiveness 2007 - 2013 3 This section draws on Jungwiertová, L., Feřtrová, M. and Blažek, J. (2013) ‘The decline of explicit regional policy? Regional policy developments in the Czech Republic, 2012-13’, EoRPA - Regional Policy Developments Europe: Country Reviews 2012-13 2 destination of tourists from abroad, who represent more than 90% of all accommodated guests. However, Prague is also a common destination for domestic business trips.4 Table 1: Selected structural economic data for NUTS 3 regions in the Czech Republic Self-governing region GDP per capita (in Education index Foreign direct investment Employment in (NUTS 3) percent) per capita (€ thousand) tertiary sector EU27 = 100 (percent) 2001 2011 2001 2011 2001 2011 2000 2010 Prague 142 173 73.4 79.4 13.06 39.35 78.1 82.6 Central Bohemia 66 71 41.8 54.6 2.92 7.76 54.5 61.4 South Bohemia 44 53.7 1.76 51.1 64 68 5.42 52.7 Plzeň 65 72 43.6 51.7 2.23 5.05 52 52.4 Karlovy Vary 59 57 36.9 41.7 1.14 2.51 57.4 57.9 Ústí nad Labem 57 64 35.9 43.6 2.64 4.08 54.5 53.5 Liberec 62 61 41 49.2 1.30 5.19 45.8 48.6 Hradec Králové 65 69 43.7 52.4 1.13 3.33 52.8 54.8 Pardubice 60 65 42.1 51.4 1.71 3.97 54.5 50.4 Vysočina 60 66 40.9 51.1 1.47 3.77 44.4 49.6 South Moravia 65 75 48.6 59.3 1.63 5.31 55.9 61.2 Olomouc 55 62 43.8 53.8 1.19 1.88 50.3 55.2 Zlín 59 68 42.6 53.7 1.39 3.28 47.8 48.5 Moravia–Silesia 55 70 42 52.2 0.97 5.44 52.9 54.3 Czech Republic 70 80 46.1 55.7 3.01 8.88 55.6 58.6 Source: Jungwiertová, Feřtrová and Blažek, (2013) op. cit. Notes: (1) The education index is calculated as a sum of weighted share of population aged more than 15 years old with secondary education (weight 1) and with tertiary education (weight 2). (2) Employment in the tertiary sector relates to the employed in the national economy by CZ-NACE (according to the LFSS) – categories G - S. Table 2: Regional unemployment rates in the Czech Republic, by quarter, 2011-2013 2011 Q1 2011 Q2 2011 Q3 2011 Q4 2012 Q1 2012 Q2 2012 Q3 2012 Q4 2013 Q3 Prague 3.7 3.6 3.7 3.6 3.7 3.7 4.4 4.5 4.5 Central 6.1 5.5 5.4 5.4 5.9 5.5 6.9 7.2 6.6 Bohemia South 6.6 5.3 5.1 5.3 6.4 5.4 7.0 7.7 7. Bohemia Plzeň 6.6 5.5 5.4 5.4 5.9 5.1 6.4 6.8 6.6 Karlovy Vary 9.1 8.1 7.8 7.7 8.4 7.7 10.0 10.4 9.3 Ústí nad 10.3 9.4 9.4 9.5 10.4 9.8 13.1 13.6 11.3 Labem Liberec 8.0 7.3 7.3 7.1 7.6 7.1 9.6 9.9 8.4 Hradec 6.2 5.2 5.1 5.3 6.0 5.4 7.2 8.0 7.2 Králové Pardubice 7.4 6.0 5.8 5.9 6.9 5.8 7.6 8.4 7.7 Vysočina 8.1 6.4 6.4 6.5 7.5 6.3 8.5 9.2 8.2 South 8.3 7.2 7.1 7.2 8.0 7.1 9.3 9.8 8.7 Moravia Olomouc 9.1 7.7 7.5 7.7 8.8 7.7 10.2 11.0 9.9 Zlín 7.8 6.7 6.6 6.6 7.3 6.6 8.9 9.7 8.6 Moravia– 9.1 8.2 8.0 8.0 8.8 8.2 11.2 11.8 9.9 Silesia Czech 7.4 6.5 6.4 6.4 7.1 6.5 8.4 8.8 8.0 Republic Source: Jungwiertová, Feřtrová and Blažek, (2013) op. cit. 4 Czech Statistical Office (2013) Characteristic of the capital city of Prague 3 The global financial crisis has had an impact on territorial development patterns, reflected in drops in economic activity across the country and increasing unemployment (see Table 2). Unemployment statistics indicate that while the impact has been experienced in old industrial regions and peripheral, agricultural regions, metropolitan regions with diversified economic structures (especially Prague) have suffered the least.5 The situation of Prague is the most stable, while the unemployment rate varies only relatively moderately among the other regions. The Ministry of Finance projects another increase in the unemployment rate in 2013 and 2014. It should also be noted that a trend towards deeper differentiation at micro-regional and local levels is indicated by detailed analyses of 2009-12 of municipal-level data.6 These analyses point to a complex, fragmented pattern with neighbouring municipalities varying significantly in terms of socio- economic development according to different factors. This micro-level differentiation applies to better performing regions such as Prague.7 Population Prague dominates the population structure in the Czech Republic. Its area is 496 km2, which is only 0.6 % of the CR’s territory, but with the population of 1,246,240 inhabitants as of March 31 2013 it represents almost 12 % of the total population of the country.8 The country’s second largest city, Brno, has one third of Prague’s population.