Because of the centralistic economic structures before 1989 it has been a radical turn towards the market economy during the period of transition. The relative stable economical situation as well as the high acceptance in the population made Vaclav Klaus (financial minister of Czechoslovakia from 1989-1992) to choose the radical strategy of the so called “shock therapy”.  One in all the liberalization of the prices and markets showed a positive development of the GDP especially in the end of the 90ies and 2000 (see chart).

The main reform in the economic restructuring plan has been the privatization. Private ownership should be replaced by public ownership to get the basics for market competition. Coupons and restitution made sure to involve every Czech into this process.  By the end of 1992 there have been about  100 000 units of small and medium-sized enterprises being privatized (so called “small privatization”), mainly enterprises of the retail, gastronomy and hotel sectors. Therefore the part of the tertiary sector rose to 68%.

Privatization reform in the retail sector had a strong impact on the commercialization and formation of a  city in Prague (in terms of a CBD). The demand of foreign companies for modern office and retail estate in the old town center grew steadily from the beginning of the 90-ies. To preserve and to avoid the modernization of the old city structures the old town has been declared as UNESCO world cultural heritage by the city administration.

In these times the „ decisions of the central government as well as local politicians have been grounded in a neo-liberal approach, which has seen the free, unregulated market as the only mechanism of allocation of resources, that would generate a wealthy, economically efficient and socially just system” (Sykora).  This reserved point of view in terms of market regulation as well as the lacking competence of this stakeholder group   is typical for the institutional reorganization during transition, which will be discussed in the next posts.