REVIEW #7: Anthology of Czech State-Owned Enterprises

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The state-owned enterprises (SOEs) represent a broad category of entities pursuing commercial activities with the unifying feature of public ownership. This article summarizes the main legal forms of enterprises (state enterprises, national enterprises, and state shareholdings in private companies) through which the Czech state operates inside the economy, and provides important examples in each category. The concluding remarks stress that business operations owned by a public authority are not limited to state, but are also present at regional and local levels.

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Former structures of the planned economy in the Czechoslovak Socialist Republic reserved all economic activity from retail to manufacturing and provision of services to state enterprises or cooperative organizations.

In the 1990s, the Czech Republic undertook a transformation that resulted in the development of institutions of a liberal democratic state and a gradual opening to private ownership in the economy – partly by privatizing SOEs and partly by liberal treatment and incentives to foreign direct investments.

The central government and other public entities in the Czech Republic (regions, municipalities) are still engaged in benefit provision of the social-market economy (social security, health care, education). According to OECD data, general government spending (indicating whole spending by central and local governments, not only their direct business operations) in the Czech Republic reached 41.6% of GDP in 2015 (slightly more than 41.5% in Poland and slightly less than 42.8% in the United Kingdom)1. Business operations that remain in the hands of the state are only a fragment of full state control under the socialist regime before 1989. Nevertheless, this residue of the public operation of business activities still includes strategic enterprises in the energy sector, transportation, and other utilities. This article summarises the main legal forms of enterprises through which the Czech state operates inside the economy and provides important examples in each category.

Definition: What Are SOEs?

SOEs represent a broad category of entities pursuing commercial activities with a unifying feature of public ownership, in full or partial. The borders of this category are not as unequivocal as it may seem from such a definition – there may be several specific aspects of national law that shape opinions on which entities fit into the SOE category. The legal form of SOEs may vary significantly, from a legal form shaped specifically for SOEs to SOEs existing in a legal form of an ordinary commercial corporation.

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1 OECD (2017), General government spending (indicator). doi: 10.1787/a31cbf4d-en

Krystof Krulis
4liberty.eu