1

Cohesion and catching up policies in Czech Republic: a general

overview
Sebastian Paul
Valeria Puga lvarez

The Czech Republic has been one of the largest recipients of the Cohesion and Structural
Funds among the new members of the European Union (EU). Since its accession to the EU in
2004, the Czech Republic has received European funds in three periods: 2004 2006, 2007
2013 and 2014 2020. Although the good economic performance and the evident
improvement in competitiveness due to the massive impact of the funds, a better supervision
mechanism for the programmes should be employed.

Introduction
After the accession to the European Union (EU) in 2004 -in the eastern enlargement
process-, the Czech Republic experienced a steady economic performance boosted mainly by
a rise in domestic consumption. Notably, in 2006 the World Bank (WB) considered the Czech
Republic as a developed country, and nowadays, its recognized as one of the most innovative
and competitive EU members 1 . The European funds have been crucial for the Czech
development since its accession. Structural Funds, Cohesion Funds and Community
Initiatives have had a large impact across the country. Between 2004 and 2013 around EUR
29 billion were earmarked for the Czech Republic, more than for other Visegrad countries.
For the period 2014 2020 EUR 24 billion will be allocated in the Czech Republic.

1 Economic and development background

Historically, the Czech Republic has been a high-industrialized country. As
Czechoslovak was one of the most industrialized countries of the Soviet block. Its economy
was deeply centralised and there was no sign or reform toward an economic liberalization.
After 1989, Czechoslovak opted for fast-track reforms to liberalize its economy. This
transition from a command economy to a market economy brought about some temporary
effects such as: recession and inflation, however, its relative sound economy enabled it a rapid
recovery. In the aftermath of the velvet divorce, the Czech Republic continued to
implement a set of actions in order to free its economy, such as: mass privatizations,
liberalization of prices, banking and tax system reforms, among others. Although the radical
measures, and the first negative impact, the Czech economy rebounded and in 1995, it

1
In the Global Competitive Index 2015 2016 published by the World Economic Forum (WEF), Czech
Republic was ranked in the 31st position.
 2

attained an economic growth of 6%. In 1997, the South Asian Financial Crisis triggered a
contagion effect which affected considerably Europe, and in this case, the Czech Republic.
The new package of reforms was deeply influenced not only by the economic slowdown, but
also by the candidateship to access to the EU.

Table 1: Economic history of the Czech Republic in brief

Before accession to the European Union

1989 The Czechoslovak Socialist Republic was one of the most industrialized countries of the
former Soviet block

1989 Transitional period as Czechoslovakia Federation: Moderate recession

1993 First generation reform policies (Fast-track reforms): Mass privatization program; banking
sector reforms, partial changes of tax system; fiscal and monetary restrictions; first wave of
privatizations of large enterprises.

1994 Transitional period as Czech Republic: Market reforms

1996 Economy started to grow again
Comprehensive Tax System Reform, second wave of privatizations of large enterprises
(1994)

1997 Turmoil (1999), recovery and accession process to the EU:

2004 Second generation reform policies: Privatization of banking sector, restructuring of the largest
loss-making companies, legal framework was improved (bankruptcy procedures).
Growth since 2000 in a context of low inflation and stable but significant unemployment.

2004 After accession to the European Union

2004 Boom
2007 Strong growth was based on a rapid increase in domestic demand, with credit booms fuelling
consumption growth and investment directed towards construction and real estate

2007- 2013 Crisis

The Czech economy was severely hit by the global economic and financial crisis. Massive
drop of GDP led to increase in the unemployment rate.

2014 - Economic rebound 4.5% (2015)

Today CR has experienced a strong economic rebound over the last two years. It has been driven by
domestic demand.
Source: Authors
The accession to the EU provoked an economic boom in the Czech Republic derived
basically from domestic consumption and investment. Undoubtedly, other factors contributed
to the Czech flourishing such as: its proximity to the prosperous German market and its
satisfactory infrastructure. For example, in 2006, the Czech Republic reached its maximum
peak at 6.88% annual growth rate. The Global Economic and Financial Crisis of 2008
affected significantly the EU. While Greece, Spain, Italy, Portugal and Ireland were
dramatically hit, the Czech Republic was not immune to this tailspin. The extensive drop of
its GDP derived in a high rate of unemployment. In 2009, the annual growth rate was -
4.84%. It should be reminded that Czech Republic did not adopt the Euro instead it uses the
koruna as its currency.
 3

Despite this gloomy scenario, the Czech economy climbed out of its recession in 2013
and it has experienced a strong economic rebound over the last two years. [] There has
been a marked improvement in the governments finances, with the general government
deficit expected to fall to 1.1% in 2016 and government debt remaining well below 60% of
GDP (European Commission, 2016).
In broad terms, it can be said that Czech economy enjoys healthy growth. Concerning
to the Human Development, in 2014 this country was valued at 0.870 in the Human
Development Index, and it was ranked in the group of very high human development,
positioning it at 28 out of 188 countries. Nevertheless, the Czech Republic must tackle
regional disparities and some drawbacks chiefly in four areas: human talent, infrastructure,
and tax system and public administration. As we can see in next pages, European Funds has
been the main source to address those problems.

Table 2: European Economic Forecast Autumn 2016

Forecasts for Czech Republic 2015 2016 2017 2018

GDP growth (%, yoy) 4,5 2,2 2,6 2,7

Inflation (%, yoy) 0,3 0,5 1,2 1,6
Unemployment (%) 5,1 4,2 4,1 4,0
Public budget balance (% of GDP) -0,6 0,0 -0,2 -0,1
Gross public debt (% of GDP) 40,3 39,7 39,1 38,5
Current account balance (% of GDP) -1,2 -0,8 -0,7 -0,7
Source: 9 November 2016, European Commission, Institutional Papers 38

2 Regional development
During the era of the Soviet Union, the Czech Republic followed the policy of inter-
regional equity. After the fall of the Soviet regime, the country became an open market and
took part in the European integration process. Thus, the situation has changed significantly
and the state has developed many winner regions, but also many loser regions. Currently,
the Czech Republic is full of regional disparities. (Economics & Sociology Vol. 8, 2015, page
212-213)
The last report2 of OECD published in June 2016 revealed that the disposable income
per capita gap between the richest and poorest parts of OECD countries grew 1.5% a year on
average over 2000-13, with the biggest increases in the Slovak Republic, Australia, Czech
Republic and Canada. Although all the Czech regions were ranked at the top 20% of the
OECD group in education, it was notable Prague was ranked at the top 5%. According to this
report, regional disparities in Czech Republic are even larger in access to services, jobs, and
community, the latter being the third largest regional gap among OECD countries.

2
OECD Regions at a Glance 2016
 4

Graph 1: Performance of Czech Republic regions by well-being dimensions in

comparison to OECD regions

Source: OECD Regional Well-Being Database, country factsheet published in 2016.

That diagnosis, which evaluates its evolution over the past 15 years until 2014-
demonstrates a certain continuity in regional disparities in Czech Republic if its taken into
account that in 2010 the Czech Republic had the eightieth largest regional disparities in GDP
per capita in OECD countries. Although in the former decade all the regions grew, there was
a considerable gap, which varied from 4.8% annually in Prague to 2.2% in Northeast, one of
the less developed region in the country. For example, the comparative advantage of Prague
in Research and Development capacity is noteworthy; most branches of Czech Academy of
Sciences, research institutes and other private R&D institutions are located there. Other sign
of disparities are the differences in unemployment ratios, between 2008 2013 youth jobless
rate rose in all regions, but in Northwest it reached 28%. Since this depiction it has been
fairly clear that a vigorous intervention of government and European regional branches has
been needed.

3 Czech Republic Cohesion Policy

The Czech Republic has chosen to concentrate on several less developed regions of
the country in order to promote economic growth, equity between regions and reduction of
regional disparities by the inflow of resources. However, the Czech Republic has struggled to
accomplish these goals. The reason for the problem lies in the organizational structure of the
country. The Czech Republic is very fragmented and has to adopt internal administration
needs and European Union requirements at the same time. Thus, many regions of the Czech
Republic do not fit into the European system of classification (NUTS), which provides EU
public funds to certain regions.
Those programs focus mainly on regions located close to the border of other countries
(e.g. Karlovarsky kraj at the border with Germany). Furthermore, some clusters within the
inner peripheries of the Czech Republic are also included in these programs. The capital of
the Czech Republic, Prague, has an extraordinary position. Prague itself is a NUTS 2 region
and receives two specific programs: Prague Adaptability and Prague Competitiveness. The
major goal of the Czech cohesion policy is to realize convergence by setting up operational
programs.
 5

Graph 2: Cohesion regions NUTS 2 and NUTS 3

NUTS 2: 8 regions
(Prague included)
NUTS 3: 14 regions

Source: Ministry of Regional Development of the Czech Republic

Therefore, there are seven NUTS 2 regional programs for less developed regions, excluding
Prague, and eight thematic programs for the following fields: Transport, Environment,
Enterprise and Innovation, Human Resources and Employment, Education for
Competitiveness, Research and Development for Innovation, Technical Assistance and
Integrated Operational Programs. (Economics & Sociology Vol. 8, 2015, page 213-214)
Overall, the Czech government follows a policy of delineation by regions and
concludes that economically weak regions should invest more into innovation and related
activities. This agenda enjoys support by the regional policy. However, the government faces
the problem of limited absorption capacity in certain regions, human resources fluctuation in
public institutions, public procurement changes, and lessened media interest.

4 European Funds allocated in Czech Republic in the period

2004 2006
According to the EU categorization over regional development, most regions of the
Czech Republic have been included in the less developed regions group, while only Prague
has been considered part of the more developed regions group. By taking into account those
factors and after of the Czech Republic accession to the European Union in 2004, European
Council in Copenhagen committed to the Czech Republic for the period 2004-2006 2.6
billion which were focused on: helping to improve the business environment, increasing
labour market flexibility and upgrading the transport infrastructure. The Czech Republic
became, after Poland and Hungary, the third largest recipient of Structural Funds and of the
Cohesion Fund among the new members of the EU.
 6

Table 3: European Funds for the Czech Republic in the period 2004 2006 (EUR
millions)

Source: Ministry of Regional Development of Czech Republic

European norms stipulate that Cohesion Fund is designed for member states, not their
regions in particular, thus this Fund is a sort of a complement to other regional funds. Given
that the Czech Gross National Income (GNI) per capita is below 90 % of the EU average, this
country was allowed to obtain money from this Fund. The Czech Republic Ministry for
Regional Development coordinated intermediating entities such as: Ministry of the
Environment and Ministry of Transport, and other responsible institutions to execute priority
projects of environment (water, waste and air management) and transport (Pan-European
Transport Corridors, rail transportation, multimodal platforms, traffic management).

Table 4: Structural Funds, objectives and priorities3

Source: Authors

3
ESF: European Social Fund; EAGGF: European Agricultural Guidance and Guarantee Fund; ERDF: European
Regional Development Fund.
 7

Regarding to Structural Funds, specific objectives for Prague and for the thirteen
remaining regions were established due to the different levels of development of each group,
as it was explained ut supra. European Funds generate in general at least- three types of
benefits: direct, indirect and future benefits (for example: welfare spillover effects).
Regarding direct benefits these funds helped to create over 30 000, almost 3 000 small and
mediumsized enterprises (SMEs), over 300 information and communication technologies
(ICT) projects. European Funds also supported environmental projects, including the
construction of 370 km of new sewage systems.

5 National Strategic Reference Framework 2007 2013

After the first experience of the Czech Republic with the allocation of European Funds in
the 2004 2006 period, it was established the National Strategic Reference Framework 2007
2013 in accomplishment to the European normative. The main objective for this term was
to transform the Czech Republic in an attractive place to invest and consequently, to improve
the quality of life of its citizens by eliminating steady the regional disparities.
Thereby, as it can be observed in Table 5, the strategic objective corresponding to
balanced development of territory explicitly included regional cohesion objectives such as:
the convergence objective, the competitiveness and employment objective. On the one hand,
regarding convergence objective three priorities were incorporated: balanced regional
development, development of urban areas and development of rural areas, on the other hand,
concerning to the competitiveness and employment objective one priority was included:
development of Prague. It must be said that during this period, the euro crisis exploded
bringing about harmful effects in Czech economy.

Table 5: National Strategic Reference Framework 2007 - 2013

Global objective: Competitive Czech Republic

Strategic Competitive Czech Open flexible and Attractive Balanced

Objectives Economy cohesive society Environment Development of
Territory
Priorities Competitive Business Education Protection and Balanced regional
Sector Improvement of the development
Quality of the
Environment
Support of R&D Increase of the Improving Development of
Capacity for Innovation employment rate and Accessibility to urban areas
employability Transport
Development of Strengthening Social Development of rural
Sustainable Tourism Cohesion areas
Industry
Development of Cohesion Region the
Information Society Capital City of
Prague
Smart Administration European Territorial
Cooperation

Source: authors
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The budget for this period was EUR 26.7 billion. Each Territorial Cooperation programme
includes a minimum of 15% co-financing from each participating member state.

Table 6: Funds for the Czech Republic in billion euros 2007 - 2013

Objective Fund EU National Total

Public

Convergence CF 8.8 15 10.3

ERDF 13.4 2.3 15.8

ESF 3.6 0.6 4.2
Total Convergence 25.8
Regional Competitivenes and ERDF 0.3 0.04 0.3
Employment ESF 0.2 0.02 0.2
Total Regional Competitiveness
and Employment 0.5
Total European Territorial ERDF 0.4 - 0.4
Cooperation*
TOTAL 26.7 4.6 31.3
Source: European Commission

The short-term results were clear in four areas: employment, environment, research and
innovation, and transport. Over 26 900 jobs were created, 8000 direct investment aid projects
to SMEs were supported, over 371 000 more people had access to improved water supply,
more than 490 000 people were connected to improved wastewater treatment facilities; 640
cooperation projects between enterprises and research institutes were supported, and 1420
research projects were boosted; around 370 km railways were upgraded and nearly 2020 km
of roads were upgraded too.

6 Evaluation and results of the intervention

6.1 Expected Results from Intervention

According to Spatial Concentration of the Cohesion Policy Projects in Nationally

Delimitated Intervention Areas: The Case of Czech Republic and Poland (2015) the Czech
Republic is still lacking in implementation of its cohesion policy of targeting the least
developed regions in the country. The major goal for the coming years is to intensify the
investments in infrastructure and projects that have the potential to create higher value in the
weakest regions of the Czech Republic. (Economics & Sociology Vol. 8, 2015, page 212-
213).
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6.2 Ex-Ante Evaluation

The NSRF strategies and priorities focus on the needs and problems of the Czech
Republic by evaluating economic and social cohesion. Hence, the major goal of the Czech
Republic is to increase the attractiveness of the country by supporting investments, creating
jobs and improving infrastructure. Another important aspect is balanced territorial
development, which emphasizes the necessity of the strategic implementation of the NSRF in
order to increase territorial cohesion. Additionally, the development of urban regions is also
part of this strategy. (Ministry for Regional Development, 2006, page 8-9)
The European Commission states the guidelines for the successful implementation and
evaluation of macroeconomic measures. Nevertheless, macroeconomic figures and models are
not taken into consideration without monitoring the intervention at the qualitative level.
Necessary to that end is the measurement of operational programs and their content. After
analyzing the macroeconomic situation of the country and the EU intervention, there can be
some problematic indicators identified. For instance, the Czech Republic is struggling to
establish an efficient welfare system, which is one of the reasons for a high unemployment
rate. Furthermore, the country has overestimated the outcome indicators of infrastructure
investments (e.g. length and quality of motorways), and did not succeed with its goal of
balanced territorial development. Many less developed regions in the Czech Republic are still
not benefiting from EU intervention programs. (Ministry for Regional Development, 2006,
page 10-11)

6.3 Midterm Evaluation

The midterm evaluation analyses the success of several selected key areas in the field of
socio-economics. Indeed, the goals and objectives should comply with the previously
formulated NSRF strategies. In total, there are nine key areas, which will be covered in this
part:
Business and innovation: Labor productivity is growing constantly in the Czech
Republic, but the pace of growth is lower than the EU-27 average. The Czech
Republic has reached 80% of the 2010 EU average GDP per capita by taking the PPP
(Purchasing Power Parity) into consideration. Nevertheless, the conditions for doing
business in the Czech Republic remain a big issue. According to the World Bank and
its Ease of Doing Business Index the Czech Republic is ranked 63th (even behind
Slovakia). In other relevant evaluations, the Czech Republic is also lagging behind the
EU average, for instance in the rankings of starting a business (130th) or paying taxes
(128th). (Ministry for Regional Development, 2012, page 33)
Research and development: Every year the Czech Government spends approximately
1.6% of its GDP for Research & Development, which corresponds to almost 60 billion
CZK in 2010. Even so, there is still room for improvement and the situation remains
unsatisfactory. The highest concentration of R&D capacities (37.8% of all R&D
expenditures) is in the capital Prague. Other innovation centers are the Central
Bohemian region and the South Moravian region. (Ministry for Regional
Development, 2012, page 36-37)
 10

Tourism: Tourism is an important economic factor in the Czech Republic. In 2010,

12.2 million people tourists visited the Czech Republic and 4.6% of the population is
employed in this sector. However, the highest concentration of tourists is in Prague.
More than 7 million of the 12 million tourists visit Prague every year. (Ministry for
Regional Development, 2012, page 37-38)
Education: The Czech Republic has a high percentage of people with an upper
secondary education. At the beginning of the programming period, the Czech
Republic was struggling with a small percentage of population with higher education,
limited capacities for tertiary education, and unsatisfactory low numbers of graduates
from technical universities. From 2006 2009 the total number of students in the
tertiary sector grew by 23.5%, and by 10% among students in natural sciences.
(Ministry for Regional Development, 2012, page 39)
Employment and social inclusion: The unemployment rate in the Czech Republic is
relatively low, compared to other economies of the same size. However, there are
huge disparities among regions. While the unemployment rate in Prague (3.8%) or in
Central Bohemia (5.2%) is very low, the unemployment rate in the less developed
region of Karlovarsky kraj remains over 10%. Another problem of the domestic job
market is the social inclusion. The Czech Republic has the highest wage difference
between men and women in the whole EU. (Ministry for Regional Development,
2012, page 39-40)
Modernization of public administration: Public administration in the Czech Republic
is not working efficiently. In 2010, the quality of public institutions ranked at the 72nd
position among 139 countries. The reasons for that are the low transparency of the
government, ineffective use of public funds, and a high level of corruption. The high
level of corruption within the government is a major issue in the Czech Republic. The
Czech Republic is ranked 53rd in the Corruption Perception Index and has even fallen
lower compared to previous years. Thus, the situation has gotten even worse in spite
of financial support from the EU. (Ministry for Regional Development, 2012, page 41)
Environment and Energy Sector: During the programming period, the Czech Republic
increased its number of wastewater treatment plants and the public sewerage network
continued to grow as well. Furthermore, the percentage of population connected to
municipal water supplies has been growing, and air pollution has been reduced
significantly. This has been accomplished because the Czech Republic has shifted its
power generation towards renewable energies (especially solar energy and heat
pumps). However, the share of nuclear power is still very high, and the country is
highly depended on gas from Russia. (Ministry for Regional Development, 2012, page
43-44)
Infrastructure: The quality of railroads, motorways and transport infrastructure is very
low. Among 139 countries, the Czech Republic was ranked 80th in terms of quality of
roads in the year 2010. Motorways and expressways are especially underdeveloped.
The Czech Republic was not able to improve its infrastructure during the
programming period. (Ministry for Regional Development, 2012, page 45)
 11

Regional development: The regional disparities remain significant, especially between

Prague and the rest of country where highly different dynamics in economic
performance are noticeable. While Prague has almost closed the gap to the EU average
in terms of GDP per capita, other regions are still struggling. In general, there are huge
differences between urban and rural regions. Instead of reaching convergence among
regions, the regional disparities continue to widen. (Ministry for Regional
Development, 2012, page 49-50)

6.3.1 Overall Information

The Partnership Agreement (PA) for the Czech Republic consists of five different
funds: the European Regional Development Fund (ERDF), the Cohesion Fund (CF), the
European Social Fund (ESF), the European Agricultural Fund for Rural Development
(EAFRD) and the European Maritime and Fisheries Fund (EMFF). These Partnership
Agreements are intended to help the Czech Republic achieve its goals in terms of
sustainability and growth. The priorities of the program cover a wide range of different fields
and activities from increasing the employment rate by more effective employment services
(focusing on vulnerable groups) to the implementation of a high-quality education system.
Other financing priorities are enhancing research and innovation, increase in investments in
the private sector research and development, and the investment in sustainable infrastructure.
Furthermore, the Czech government wants to promote a transparent and effective public
administration (including less bureaucracy), fostering social inclusion by reducing poverty,
and increasing awareness of climate change by implementing measures that will protect the
environment and landscape. (European Commission, 2014)
These funds are providing medium and long-term financial assistance in order to help
the Czech Republic accomplish its set objectives. The European Commission (EC) hopes that
these incentives will lead to further investments in the private and public sectors. As a result
of this assistance, regional disparities may disappear and new jobs may be created. The
following listing explains the different funds:
ESI: The ESI fund supports the strategy of enhancing innovation and
strengthening competitiveness. The objective of the fund is to support growth,
create jobs, improve R&I, promote quality of higher education, and provide
incentives for private investment. Furthermore, the energy efficiency in
buildings will improve and the percentage of renewable energies will increase.
(European Commission, 2014)
ESF: The ESF focuses on minorities and people who do not have access to the
labor market for a variety of reasons. The capacity and quality of childcare
facilities will improve and many minorities will benefit. In general, the fund
shall help ensure a higher quality of education at all levels and to bring people to
sustainable jobs. Another objective is the improvement of the public
administration in terms of transparency, professionalism and effectiveness.
(European Commission, 2014)
 12

EAFRD: The EAFRD focuses on the sustainable use of natural resources,

biodiversity and climate action. The domestic agricultural-food sector will be
strengthened, as well as the territorial development of rural communities and
economies. (European Commission, 2014)
EMFF: The EMFF is probably the least important fund for the Czech Republic
because the country has no direct access to the sea or to any other significant
fishing source except the river Vltava. Nevertheless, the fund supports the Czech
aquaculture sector and sustainable use of resources. (European Commission,
2014)
ESIF: The ESIF will mainly support the Czech Republics efforts to meet the
2020 European objectives, like 100% internet coverage or 20% reduction in
primary energy sector by making buildings and enterprises more energy-
efficient. Furthermore, the unemployment rate will decrease, administrative
burdens for companies will disappear and the support of companies in the
international market will increase. (European Commission, 2014)

6.3.2 Budget

For the programming period 2014-2020, the EU is providing 22 billion EUR to the
Czech Republic and its Cohesion Policy (ERDF, ESF, Cohesion Fund). The money will be
allocated across the mentioned funds. Another fund is the EAFRD (fund for agriculture
development), which will be supported by the EU with an additional 2 billion EUR. The EMF
(fisheries and aquaculture) will provide 31 million EUR. Hence, the Czech Republic can only
focus on a limited number of projects for further investments. The focus in the current
programming period is on research and innovation (2.5 billion EUR), competitiveness of
companies (1.4 billion EUR), and the reduction of emissions (2.2 billion EUR). Furthermore,
the ESF contributes 3.4 billion EUR, and at least 5% of the ERDF will be invested in the
development of urban sustainability. (European Commission, 2014)

6.3.3 Programs Architecture

There are eight different operational programs for the implementation of the Cohesion
policy. All programs are co-financed by several funds: the ERDF (Enterprise and Innovation
for Competitiveness; Integrated Regional), ERDF and EF (Transport and Environment), ESF
and ERDF (Research, Development and Education; Prague Growth Pole), ESF
(Employment), CF (Technical Assistance), EAFDR (rural development) and EMFF
(fisheries) (European Commission, 2014)
The following table shows the allocation of the programs:
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Table 7: Allocation to Programmes

7 Project Examples
7.1.1 Ostrava Technology Pavilion

One successful example for the implementation of the EU cohesion policy in the
Czech Republic is the Technological Centre CPIT-TL2 in Ostrava. The total costs of the
Project were 218 million CZK and EU contributed from 2004 - 2006 106 million CZK in the
construction of the technology center. Ostrava is located in the Moravia-Silesia region, which
is one of the less developed regions of the country. The aim of the project was to create a
property for innovative processes and to improve the production capacity. Furthermore, the
technology center is supposed to have a positive effect in terms of sales, production and
competitiveness. The concept of the CPIT-TL2 is to give especially young start-up companies
and entrepreneurs the opportunity to create their own businesses. Thus, in order to accomplish
these objectives, the technology center provides a wide range of services from first-rate
services to facilitating collaboration with university laboratories. The CPIT-TL2 provides for
that purpose professional guidance in form of experienced internal and external consultants.
One of the priorities is the cooperation with local institutions, especially universities (e.g. the
Technical University in Ostrava). Consequently, since the establishment of the technological
incubator the cooperation with the local universities and high schools has significantly
increased. (European Commission, 2009, page 4)
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7.1.2 A Garden With Two Shores

The European cohesion policy is not only supporting economics, but also cross-
cultural projects and intercultural communication between nations by improving life quality
and other living standards. This is exemplified by the INTERREG IIIA Czech Republic
Poland program. The program was launched in 1999 and is the largest and most important EU
Community Initiative for cross-border cooperation. (Ministry for Development, 2012) The
EU contributed 0.14 million PLN and 1.4 million CZK to the cross-cultural project between
the Polish town Cieszyn and the Czech town Tn. Both towns share a common border and
are divided by the river Olza. The project is supposed to promote further intercultural
integration and is structured into two phases. The first phase is the preparatory phase, which
develops strategies for both towns by making surveys among inhabitants. The second phase is
the development phase, which includes the construction of three new modern footbridges,
parks, playgrounds, skate routes, etc. One of the most important principles of the project is
active participation of the community in order to increase life quality for Polish and Czech.
(European Commission, 2009, page 4)

8 Conclusion
It is important to mention the role of the recipient countries regarding the efficient use of
European Funds and their absorption capacity. In the case of Czech Republic often this has
not been properly addressed. In the two years to 2015, around 6.5 percent of all structural
fund projects had irregularities, putting the Czech up there with Slovakia as one of the worst
performers in the European Union (Johnstone, 2016). Additionally, the last report of OECD
demonstrates that regional disparities in Czech Republic over 2000 2013 increased in terms
of income per capita. That brings the necessity of reassessing not only the transparency
mechanisms, but also, the efficient use of the resources and the responsibilities of the actors.
 15

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