Analysis
Why is Czechia called the assembly plant of Europe?
Czechia combines high returns on foreign capital, an exceptionally large industrial share of employment and a substantial outflow of income from foreign direct investment.
Key findings
Czechia combines high returns on foreign capital, an exceptionally large industrial share of employment and a substantial outflow of income from foreign direct investment.
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Explanation
According to Eurostat and Czech National Bank data, the Czech economy has three distinctive features that help explain why Czechia is still described as the “assembly plant of Europe”.
The first is the exceptionally high return on foreign capital. Averaging Eurostat annual values for 2015–2024 gives a return on foreign direct investment in Czechia of around 11.2% a year, compared with roughly 4.5% in Germany and 4.7% in France.
The second feature is the unusually high concentration of employment in industry. Eurostat reports that 27.5% of employed people in Czechia work in industry.
The third feature is the outflow of profits generated in the country. According to Czech National Bank data, foreign-controlled companies earned CZK 612.8 billion in Czechia in 2025 but reinvested only CZK 238.5 billion, or just under 39%. The Czech National Bank reports that the net outflow of income from foreign direct investment reached 5.2% of Czech GDP in 2025.