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© 2023 International Monetary Fund
SIP/2023/013
IMF Selected Issues Paper
European Department
Structural Transitions to Electric Vehicle Production: Czech Republic
Prepared by Stephen Ayerst and Neree Noumon*
Authorized for distribution by Miguel Segoviano
January 2023
IMF Selected Issues Papers are prepared by IMF staff as background documentation for periodic consultations with member countries. It is based on the information available at the time it was completed on December 12, 2022. This paper is also published separately as IMF Country Report No 23/32.
ABSTRACT: Sustaining the impressive convergence gains allowed by the Czech automotive sector has become challenging due to its comparatively lower value added, lower investments in research and development, and lower skills in the labor market. Using a structural model of global value chains, the paper examines policies to smooth the transition to the production of electric vehicles in Czechia. The analysis explores the impacts of increasing labor productivity, boosting production capabilities, and moving up the global value chain. These policies were found to have a relatively lower impact when they shift specialization towards lower value-added stages of production.
RECOMMENDED CITATION: Ayerst S. and Noumon N. (2023)
| JEL Classification Numbers: | E22, F23, J24, L62, L16, C54 |
| Keywords: | Automotive industry, Czech Republic, Convergence, Electric vehicles, Global value chains, Labor productivity, Structural Policy |
| Author’s E-Mail Address: | SAyerst@imf.org; NNoumon@imf.org |
| JEL Classification Numbers: | E22, F23, J24, L62, L16, C54 |
| Keywords: | Automotive industry, Czech Republic, Convergence, Electric vehicles, Global value chains, Labor productivity, Structural Policy |
| Author’s E-Mail Address: | SAyerst@imf.org; NNoumon@imf.org |
Title Page
SELECTED ISSUES PAPERS
Structural Transitions to Electric Vehicle Production
Czech Republic
Title Page
CZECH REPUBLIC
SELECTED ISSUES
December 12, 2022
Approved By
The European Department
Prepared by Stephen Ayerst and Neree Noumon. Assistance was provided by Ritzy Dumo and Iyad Alasal (all EUR).
Contents
CZECHIA: STRUCTURAL TRANSITIONS TO ELECTRIC VEHICLE PRODUCTION
A. Background: Automotive Production in Czechia
B. A Structural Model of the Automotive Global Value Chain
C. The Transition to Electric Vehicle Production
D. Conclusion and Policy Recommendations
FIGURES
1. Cross-Country Comparison of Productivity and R&D
2. Sectoral Share of Czechia Economy
3. Intermediate Suppliers and Consumers from Czechia Auto Sector
4. Value Added and Skill Intensity of the Automotive Sector
5. Electric Vehicle Production in Czechia
6. Automotive Global Value Chain Structural Model Illustration
7. Illustration of the Automotive GVC
8. Transition to Electric Vehicle Production
9. Impact of Policy on Employment and Value Added
TABLE
1. Calibrated Parameters
ANNEX
I. Model Description and Calibration
References