1. Country Report
Austria, officially known as the Republic of Austria, is a landlocked country in Central Europe with a population of 8.67 million people. It is bordered by the Czech Republic and Germany to the north, Hungary and Slovakia to the east, Slovenia and Italy to the south, and Switzerland and Liechtenstein to the west. Austria’s terrain is mountainous in the west and south due to the Alps, but is mostly flat in the eastern and northern areas. The majority of Austrians speak German, the native language, but minorities are speaking other languages, which
include Turkish, Serbian, and Croatian.
During World War II, Austria was incorporated into the German Reich, but was restored to its original borders in 1945 and was occupied by the United States, the Soviet Union, the United Kingdom, and France for ten years. After this time, the Austrian State Treaty was ratified and Austria declared its permanent neutrality. Austria has developed as a “nerve center” between the East and the West. Recently Austria has struggled to deal with the inflow of migrants from the Middle East and Africa. It is the last stop by many migrants who travel up the Balkan Peninsula on their way
into Germany. On March 9, 2016, President of the European Council Donald Tusk declared the migrant route along the Balkans had “come to an end”. However over 24,000 migrants have traveled through to Austria this year putting a strain on the government.
2. Geographical position
Austria has a total area of 83,879 square kilometers and consists of nine federal provinces: Vienna (also Austria’s Capital), Burgenland, Carinthia, Lower Austria, Salzburg, Styria, Tyrol, Upper Austria and Vorarlberg.
The country shares its border with eight neighbors: Germany, Czech Republic, Hungary, Italy, Liechtenstein, Slovakia, Slovenia and Switzerland.
Austria’s geographical location in the heart of Europe provides foreign investors with bottomline strategic advantages for their business operations. Due to its unique geographical position, Austria is an ideal business location – whether as an East-West interface or as headquarters for a company’s Central and Eastern European business activities. The geographical proximity to all major CEE cities is an important competitive advantage: the distance from Vienna to Prague is 299 kilometers, whereas Budapest is only 266 km away.
Austria offers a top-notch, high-quality network of motorways, highways and federal roads spanning about 125,000 km, as well as six international airports. Vienna International Airport is the most important East-West transportation hub, providing flight service to 35 destinations in the CEE region.
3. Connections between East and West
Due to the fact that Austria is situated along the Danube River, it is easily accessible via waterway. Because of the Rhine-Main-Danube Canal, the Danube serves as the direct link between the North Sea and the Black Sea. All four Danube ports in Austria, namely Vienna, Linz, Enns and Krems, are equipped with the most advanced technical facilities. The Port of Vienna is the largest inland container port in all of Europe.
Austria is home to roughly 8.8 million people. Its employment rate of 77.3 percent is above the EU-28 average of 76.2 percent. The country’s official language is German. However, Austrians also have an excellent knowledge of foreign languages. The vast majority of Austria’s resident population speaks English, but there is also a large number of Austrians with a sound knowledge of Eastern European languages.
5. Economic Indicators
Austria is one of the 25 richest countries in the world in terms of GDP (gross domestic product) per capita, has a well-developed social market economy, and a high standard of living. Austria started the privatization of industries and services in the 1940s. Now, in the 21st century, most industries and services are privately held.
GDP growth in 2015 was 0.9%. Its public debt as a % of GDP as of 2015 was 84.2%. The inflation rate in Austria was last reported at 0.9% in 2015.1
6. Economic Overview, Economic Structure2
Austria is a well-developed market economy with a skilled labor force and high standard of living. It has a population of over 8.7 million. Its economy is closely tied to other EU economies. The EU’s eastward expansion and Austria’s geographic location make it an attractive hub for regional trade. Austria is one of the leading foreign investors in Central and Eastern European countries. Its economy features a large services sector (e.g. tourism); a sound industrial sector and a small agricultural and forestry sector. Austrian exports of goods and services represented almost 53 per cent of GDP in 2016.
a) Aid programming
Austrian Development Cooperation (ADC) strategies and programs are developed by the Federal Ministry for Europe, Integration and Foreign Affairs and implemented through the Austrian Development Agency (ADA). ADC’s aims include reducing poverty, conserving natural resources and promoting peace and human security in partner countries across Africa, Asia, South Eastern and Eastern Europe, and the Caribbean. The Austrian Government has committed to achieving the 0.7 per cent ODA/GNI target in its Work Program 2013-18 and has signed the UN 2030 Agenda for Sustainable Development.
b) Bilateral Relations
Austria has had links with Australia since the beginning of European settlement. Austrians visited Australia as members of scientific, diplomatic and religious missions in the late 18th and 19th centuries. Most Austrian migration to Australia took place between the end of World War II and 1960. Today, the relationship is marked by strong people-to-people links with around 42,500 Australians of Austrian ancestry. Australia has a number of bilateral agreements with Austria, including on social security, double taxation, mutual legal assistance, and aviation.
c) Bilateral economic and trade relationship
Australian merchandise exports to Austria were $48 million in 2016. Australia’s main merchandise exports to Austria were gold coin and legal tender coin, measuring and analyzing instruments, electrical circuits equipment and aircraft, spacecraft and parts. Australia’s merchandise imports from Austria totaled $1.4 billion and mainly included milk, cream, whey and yoghurt; civil engineering equipment and parts; goods vehicles; and motorcycles and cycles. The primary services trade between Australia and Austria is tourism. In 2016, more than 140,000 Australians visited Austria and 18,500 Austrians visited Australia.
Total Australian investment in Austria was $1.1 billion in 2016. Austrian investment in Australia was $3.6 billion in 2016. Around 80-90 Austrian companies have production facilities, sales offices and/or representative offices in Australia. Another 800-900 companies maintain regular business contact with Australia. Austrian investment is mainly in the areas of machinery, infrastructure (rail and road), communication systems and the electrical industry.
Some of the larger Austrian firms operating in Australia include Andritz (hydroelectric turbines); Voestalpine (VAE Railway Systems); Plasser & Theurer; Rhomberg (railway sector); Frequentis (public security and air traffic control systems); OMV (gas and oil exploration); Vamed (hospital management and operations); and KapschTrafficCom (traffic management).
Austria’s economic potential provides scope for further market opportunities in both goods and services for Australian businesses. Opportunities exist in tourism, biotech, financial services, education, research and innovation, IT, and niche areas of the highly diversified Austrian manufacturing sector.
d) Economical general structure
Agriculture (1.4% of GDP): Products – grains, potatoes, wine, fruit, dairy products, cattle, pigs, poultry, and lumber. Industry (27.9% of GDP): Types – construction, machinery, vehicles and parts, food, metals, chemicals, lumber and wood, and paper and paperboard. Services (70.7% of GDP)
Exports–$141.4 billion: machinery and equipment, motor vehicles and parts, paper and paperboard, metal goods, chemicals, iron and steel, textiles, foodstuffs. Imports–$139.8 billion: machinery and equipment, motor vehicles, chemicals, metal goods, oil and oil products, foodstuffs. Principal trade partners—Germany, Italy, France, and Switzerland.
8. Political Considerations
a) Political Environment
The Republic of Austria is a parliamentary democracy. Its legislative organs are the National Council, the Federal Council, and the provincial parliaments.
The 183 members of the National Council as well as the members of the nine provincial parliaments (for each federal province) are elected directly, while the members of the Federal Council are elected by the provincial parliaments.
The current Federal Chancellor is Sebastian Kurz (Austria’s People’s Party), the Vice-Chancellor is Heinz-Christian Strache (Austrian Freedom Party) and Margarete Schramböck (Austria’s People’s Party) serves as Federal Minister of Economy.
Austria became a federal and democratic republic in 1920 through the Federal Constitution of 1920. The political system of the Second Republic, with its nine states, is based on the constitution of 1920 and 1929, which was reenacted on 1 May 1945.
The head of state is the Federal President (Bundespräsident), who is directly elected by popular vote. The chairman of the Federal Government is the Federal Chancellor, who is appointed by the president. The government can be removed from office by either a presidential decree or by vote of no confidence in the lower chamber of parliament, the Nationalrat.
Austria is a Federal Republic comprising nine provinces, each with its own provincial assembly and government. Legislative power is vested in a bicameral Federal Assembly. The Lower House, the Nationalrat, has 183 members elected for five-year terms. The Upper House, the Bundesrat, has 62 members elected by the provincial assemblies.
Seats are apportioned in relation to the population of each province.
The Head of State, the Federal President, is elected by popular vote for a six-year term and is primarily a ceremonial role. The Federal President appoints the Federal Chancellor (the head of government) and government members. Alexander Van der Bellen, a former Greens leader who ran as an independent, was elected President on 4 December 2016. He replaced Heinz Fischer, who served two terms as Federal President from 2004 until 2016.
The current coalition government between the Social Democratic Party of Austria (SPÖ) and the center right People’s Party (ÖVP) was returned to government in 2013. Since May 2016, Christian Kern (SPÖ) has been Federal Chancellor. Sebastian Kurz (ÖVP) is the Federal Minister for Europe, Integration and Foreign Affairs. Early elections have been called for 15 October 2017.
Trade with other EU countries accounts for almost 72% of Austrian imports and exports, with Germany being its biggest partner. Expanding trade and investment in the emerging markets of central and Eastern Europe is a major element of Austrian economic activity.4 40% of all foreign direct investment in that region comes from Austria. Austria also provides transit trade for goods and services traveling east and west across Europe.5
Export incentives. Austria’s Export Fund helps support SME who export goods made, or significantly worked, in Austria, offering loans to eligible businesses at very modest rates.6
b) First class services sector
The services industry is Austria’s fastest growing industrial sector. 68% of Austria’s wage earners and salary workforce are employed in the trade and industry sector, which contributes some 65% to the GDP. Tourism is the country’s biggest foreign exchange earner and the fastest growing sector: 334,000 people are employed in tourism. Other areas of interest in this sector include trade and banking.7
c) Educated work force
Education: Austria’s workforce is highly educated and motivated, with a strong tie between centers of education and the business community. Austria spends $13,607 per student for secondary education.8
d) Global position
Austria’s capital Vienna is the base for a number of major international organisations, including the Organization for Security and Cooperation in Europe (OSCE), the International Atomic Energy Agency (IAEA) and the Organization of Petroleum Exporting Countries (OPEC). The United Nations (UN) has a major centre in Vienna.
e) Foreign policy
Austria has been an EU Member State since January 1995 and ratified the EU Lisbon Treaty in 2008. It is committed to strengthening the EU’s role as an international actor, supporting measures to deepen the Common Foreign and Security Policy and the interests of South East European countries to integrate with the EU. Austrian Johannes Hahn has been EU Commissioner for European Neighborhood Policy and Enlargement Negotiations since 2014. While maintaining its neutral status, Austria is engaged in the NATO Partnership for Peace program. Austrian troops are deployed in a range of NATO missions but Austria has no plans to join NATO. Austria was a member of the UN Human Rights Council for the 2011-2014 term. Its last term on the UN Security Council was 2009-10. Austria is the 2017 chair of the OSCE.
10. Areas of Prospective Development
a) Attempts to increase competitiveness
Steps to increase competitiveness include plans to increase research and development funding by 2020 and a new wave of technology start-ups. There are not many well-known Austrian companies, but the ones that are established provide high quality, niche products that do very well. The naïve workers are “high cost but also high quality” and have great motivation and skills to create success. Austria just needs to expand the system they already have in place and they can become an even more essential part to the global market.
b) Dependence on foreign energy sources
Austria is heavily dependent on foreign energy sources, especially from Russia. The European Union, including Austria, relies on Russia for oil, gas, and coal imports, as demonstrated when gas was cut off through the Ukraine.9 Austria needs to develop its own energy resources in order to combat this dependency. Austria is currently working on creating renewable gas from food and farm waste, manure, and sewage. This initiative not only helps achieve climate policy objectives, but also allows for more energy security in the nation.
Summary: Altogether, we can state that an investment in Austria constitutes a good financial opportunity due to the stability and strong economy of the country. The stability derives from legislative and economical balances, which are further strengthened by the special position of our trust (i.e. background of the abbey, immunity, and the advantages of Anglo-Saxon legislature) further references in section III. Hereto.