Loyola University Maryland

MBA Prague and Berlin

About Cities

About Prague

One of Europe’s best-preserved cities, Prague has a romantic riverside location enhanced by graceful bridges and a magnificent skyline punctuated with medieval church spires. Its historic Old Town follows a plan laid out 1,000 years ago, with ancient squares and winding cobblestone streets. Haunting Prague Castle looms large across the Vltava River, rising above the exquisite Charles Bridge. Add extravagant, fairy-tale architecture; memorable classical music; and, these days, good food and drink, and it’s easy to see why Prague charms everyone who visits.

History

After World War II, the political system in Czechoslovakia was greatly affected by the introduction of a Soviet-style Communist regime, which ruled for over 40 years.  After the revolutionary events of November 1989 which brought about the downfall of the Communist regime, the entire country faced the uneasy task of resuming its pre-Communist traditions and building a democratic political system. A wide diversity of political parties were well-established even before the break-up of Czechoslovakia on December 31, 1992. The constitution of the Czech Republic, which became valid on the day of the birth of the new state, explicitly defined civil rights, the relationship between the executive and legislative branches of power, and the independence of the judiciary.

Economy

The Czech Republic officially applied for EU membership on 17 January 1996, and was admitted in May 2004.  Prague has a well-diversified economy with an emphasis on the industrial sector.  However, in the last decade, Prague’s economy has undergone a major transformation; manufacturing has decreased and there has been rapid growth in the newly privatized service sector. The tourism industry is playing an exceptional role in the economy, contributing nearly 60% to Prague’s overall income. Prague has a lower unemployment rate than the rest of the country. Even though jobs have declined in the manufacturing sector, Prague still holds the largest industrial center in the Czech Republic.
A significant proportion of research and development is based in Prague, especially in the search to find alternatives for natural resources. The city is still highly dependent on Russia for the supply of oil and gas and therefore officials are looking to develop solar power and nuclear plants, as well as other fossil fuel solutions.

Prague’s GDP per capita is almost double the Czech Republic and the city is responsible for generating over 21% of the national gross domestic product. This ranks Prague amongst the 12 richest EU regions in terms of GDP per capita/Purchasing Power Parity.

About Berlin

Hip, energetic Berlin has grabbed the world’s attention with its exuberant urban life and vibrant arts scene. Gone are the days of drab Cold War Germany and a city divided by the Wall. In this cosmopolitan and affordable capital, neighborhoods bustle with restaurants, cafés, and nightlife. Museums and sights such as the Pergamon on Museum Island, the Brandenburg Gate, and the Jewish Museum provide a window into Berlin’s rich history. Today the stitched-together heart of Germany beats fast.

History

In 1933 Adolf Hitler and the Nazi Party came to power. NSDAP rule diminished Berlin's Jewish community from 160,000 (one-third of all Jews in the country) to about 80,000 as a result of emigration between 1933 and 1939. Starting in early 1943, many Jews were shipped to death camps, such as Auschwitz. During World War II, large parts of Berlin were destroyed in the 1943–45 air raids and during the Battle of Berlin. Around 125,000 civilians were killed.  After the end of the war in Europe in May 1945, Berlin received large numbers of refugees from the Eastern provinces. The victorious powers divided the city into four sectors, analogous to the occupation zones into which Germany was divided. The sectors of the Western Allies (the United States, the United Kingdom and France) formed West Berlin, while the Soviet sector formed East Berlin.

All four Allies shared administrative responsibilities for Berlin. However, in 1948, when the Western Allies extended the currency reform in the Western zones of Germany to the three western sectors of Berlin, the Soviet Union imposed a blockade on the access routes to and from West Berlin, which lay entirely inside Soviet-controlled territory. In 1949 the Federal Republic of Germany was founded in West Germany and eventually included all of the American, British and French zones, excluding those three countries' zones in Berlin, while the Marxist-Leninist German Democratic Republic was proclaimed in East Germany.

The founding of the two German states increased Cold War tensions. In 1961 East Germany began the building of the Berlin Wall between East and West Berlin, and events escalated to a tank standoff at Checkpoint Charlie. West Berlin was now de facto a part of West Germany with a unique legal status, while East Berlin was de facto a part of East Germany. John F. Kennedy gave his "Ich bin ein Berliner" – speech in 1963 underlining the US support for the Western part of the city. Berlin was completely divided. Although it was possible for Westerners to pass from one to the other side through strictly controlled checkpoints, for most Easterners travel to West Berlin or West Germany was prohibited by the government of East Germany.

In 1989, with the end of the Cold War and pressure from the East German population, the Berlin Wall fell on 9 November and was subsequently mostly demolished. On 3 October 1990, the two parts of Germany were reunified as the Federal Republic of Germany and Berlin again became the official German capital. 

Economy

The economy of Berlin was once a major manufacturing center and the economic and financial hub of Germany. It is located at a point where trade routes crossed the River Spree and quickly became a commercial center. During the early modern period, the city prospered from its role as Prussian capital by manufacturing luxury goods for the Prussian court and supplies for the Prussian military. The Cold War permanently changed the landscape and after re-unification the city has relied increasingly on economic activity in the service sectors. Berlin has been called the "Capital of poverty", as the city still has one of the lowest per capita incomes of all metropolitan regions in Germany and a record accumulated state debt. There are also the highest amount of people living on welfare benefits. The government has made significant improvements and recently reported its first surplus.

Berlin is quite unique in that one of the most important "products" is research. That research is exported around the world. German labor is highly efficient, but at a high cost. Strong trade unions have kept labor costs high, for those who can secure a position. Berlin is also a world leader in the sector of electrical equipment manufacturing. Fast-growing sectors are: communications, life sciences, mobility and services with information and communication technologies, media and music, advertising and design, biotechnology and environmental services, transportation and medical engineering. The fastest growing industry is tourism. Berlin is the third most visited city destination in the European Union .