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Czech gov’t approves aid in return for Volkswagen investment

The Czech government agreed Wednesday to upgrade infrastructure near two Skoda Auto AS plants if automaker’s parent company Volkswagen AG chooses to expand production there.

The cabinet approved spending 1.4 billion koruna ($87 million) mostly on road improvements around factories in central Mlada Boleslav and northern Vrchlabi in exchange for more investment. Skoda Auto said earlier it was requesting billions in investment from Volkswagen for expanding production in the Czech Republic.

Skoda, which recently won a 1.1 billion koruna ($68 million) contract for 3,500 police cars, is the country’s leading exporter. The automaker sold over 630,000 cars in 2007, an increase of 15% from the previous year. (m&