Abstract:

The aim of this paper is to express, using the Helpman-Krugman model of international change, the increase in production volume and the number of companies (as well as the decrease in prices and average costs of companies) in both countries caused by the increase in the mutual foreign change of the Czech Republic and Germany. Economies of scale are the reason for countries to specialize in the production of a limited range of goods. In 2015, the turnover of mutual foreign trade between Germany and the Czech Republic reached the record figure of CZK 2.15 trillion. The Czech Republic and Germany began to work closely in introducing the new industrial production concepts collectively known as Industry 4.0. It is a new phenomenon that is related to the development of information technology, Internet communications, automation and the digitization of production.  Germany can offer the Czech Republic extensive knowledge on how to make the introduction of new technologies and production procedures easier for companies. For example, an open laboratory testing facility for small and medium-sized enterprises is to be established on the grounds of the Czech Technical University in collaboration with the German Research Centre for Artificial Intelligence (DFKI).