The service sector accounted for 53 percent of the GDP in 1999. As opposed to a negative trade balance in industry, the Czech Republic registered a positive trade balance in services between 1993 and 2000. The service sector employed 53.7 percent of the labor force in 1997.
As insurance was not provided under the communist system, there was significant growth in this area during the first decade of capitalism . Financial services and consulting companies experienced similar growth. Although foreign companies initiated growth in this sector, they quickly gained competition from Czech companies. The majority of commercial banks are under private ownership. Foreign banks constitute a growing proportion of this sector.
There is an ever-increasing number of Internet service providers in the Czech Republic. In addition, there has been some growth in the area of Internet software development, which began attracting foreign investment in the late 1990s.
The retail portion of the service sector has undergone dramatic changes since 1989. Under the communist economic system, retail operated through state-owned shops. Not only were product shortages common and the displays unattractive, but these stores were often over-staffed and employed people unsuited to the job.
Retail stores were privatized early in the transition to a free market. The retail sector consists of restructured stores as well as completely new stores. These stores differ greatly from their communist-era predecessors, as they have adopted capitalist marketing methods and retail decorum. Among the most popular products among consumers are foreign appliances, such as televisions, VCRs, and stereos.
Tourism has increased exponentially since the demise of communism in 1989. Nearly all tourist facilities have been privatized. Tourism contributed $3 billion to the country's net foreign currency earnings in 1999, and approximately 100 million people visit Prague, the country's capital, each year. Most tourist revenues remain in Prague, which is renowned for its architecture and history. The majority of visitors come from the Czech Republic's neighboring countries. The dramatic increase in tourism has led to an increased need for tourist services, particularly for hotels. Foreign tourists visiting Prague account for three-quarters of all hotel capacity in the Czech Republic. In addition, the city of Prague is attempting to improve its image as a potential convention site. While in the Czech Republic, tourists engage not only in sightseeing, but also in concerts, sports, and gambling.