Austria’s Economy: Competivetiveness, Stability, and Innovation
Austria is a small, alpine nation in central Europe. Its immense beauty and rich cultural heritage attract thousands of tourists each year. But the success of Austria’s economy is due to much more than its picturesque scenery. An impressive combination of economic leadership, government policy and strong innovation has allowed Austria to become one of the most competitive economies in the world.
Competitiveness
Austria’s economic success is rooted in its competitive nature. As of 2019, Austria was ranked 24th out of 63 countries on the Global Competitiveness Index maintained by the World Economic Forum. This ranking is largely driven by Austria’s excellent performance in many areas, including business sophistication, market size and higher education and training.
One of the key drivers of Austria’s business sophistication and market size is foreign direct investment (FDI). Foreign direct investment projects (contributing to
over 42,000 jobs) total at least 10 billion Euros, created by over 455 companies. The amount of FDI Austria receives has grown by 40% over the past five years.
In terms of higher education and training, Austria is home to some of the best universities in Europe. The country boasts 12 top-ranked universities, with 4 of them in the top 100 of the Times Higher Education World University Rankings 2020. The Austrian government encourages high educational standards and promotes STEM-oriented educational programming to ensure Austria’s future competitiveness.
Stability
In addition to being competitive, Austria’s economic success is driven by its stability. The country has avoided economic shocks and maintained an enviable budget surplus, coming in at 0.3% of GDP in 2019. This stability has led to consistently low levels of unemployment, at just 4.4% as of 2020.
Austria also boasts a very healthy banking system. As of 2019, Austria’s banks had 22% of their portfolios in government-backed securities and 18% in loan transfers. Austria achieved investment grade status from all three major rating agencies in September 2017. This rating reflects the strength of Austria’s economic and banking fundamentals, which are necessary foundations of a stable economy.
The Austrian economy is also supported by strong government policy. Austria’s government has created a favorable environment for business by emphasizing larger investments in infrastructure, human capital and digitalization. The Austrian National Bank also keeps a keen eye on financial stability with extremely low inflation and near-zero interest rates.
Innovation
Austria’s economy is also strong due to its inventive nature. The country is a hub of scientific research and technological innovation, with an excellent track record of patents and innovation-driven startups.
Innovation in Austria is facilitated by the Austrian Research Promotion Agency (FFG), which supports science and research in Austria. FFG funds a wide range of research and development (R&D) initiatives, from energy efficiency to robotics and more.
Austria is also home to a number of high-tech incubators and accelerators, such as Austria’s Technology and Transfer Center (TTZ). TTZ provides valuable resources for businesses seeking to develop new products and services. This helps to nurture a culture of innovation throughout Austria.
Austria has become one of the most advanced and competitive economies in the world thanks to its impressive combination of economic leadership, government policy and strong innovation. Its combination of competitiveness, stability and innovation make it an excellent place to invest and do business. With such a powerful combination of factors supporting its success, Austria is sure to make a lasting mark on the global economy.