Austria - Overview:
Austria is the fourth wealthiest member of the EU and enjoys a stable economy with low inflation at around 1 per cent and growth that is generally in the region of 2 to 3 per cent a year. The level of GDP per capita is well above the EU average and places Austria 10th among the OECD countries. Unemployment is among the lowest in Western Europe and, according to EU calculation is approximately 4 per cent.

Economy:
Services account for approximately 67 per cent of the economy, industry for about 30 per cent and agriculture for the rest. Leading industries include machine and steel production, chemicals, food and automotive. Austria also has a reputation for producing advanced electronics, especially customised products such as chips for airbags and ABS-braking systems. The industrial and commercial sectors are characterised by a high proportion of medium sized companies. Following the end of the Second World War many of the country's largest firms were taken into state ownership. The government still operates some firms, state monopolies, utilities and services but many firms have been partly or completely privatised and this trend is set to continue. Despite the relatively small contribution of the agricultural sector to the nation's GDP, domestic products provide about 80 to 90 per cent of the country's food requirements. Typical crops include sugar beet, potatoes, grain, grapes, tobacco, flax, hemp and wine.

Due to its small domestic market Austria is highly dependent on exports and has trading partnerships with more than 150 countries. Exports make up approximately 30-40 per cent of the country's GDP. Around two thirds of the country's trade is with EU nations, primarily Germany, while trade with both the USA and the former USSR has fallen as a percentage of the total in recent years. Saudi Arabia is the most important trading partner in the Middle East. Trade with the markets of Eastern Europe is of increasing importance. Hungary, the Czech Republic and Russia are the most important of Austria's Eastern European trading partners.

Austria's membership of the European Union since 1995 has helped to attract major inward investment. Foreign investment has increased by 70 per cent since 1994 with major investors including Germany, Switzerland and the United States. The level of investment has declined in recent years but the country is still attracting new businesses. More than 1,000 international companies have business operations in Austria including Chrysler, Coca-Cola, Hewlett Packard, IBM, McDonalds, Siemens and Ericcson.

Infrastructure:
The country's geographic position close to several major countries in the EU and Eastern Europe means it is ideally placed to benefit from the eastern expansion of the EU and represents an excellent European business centre. Countries with which Austria shares land borders include Germany, the Czech Republic, Slovakian Republic, Hungary, Slovenia, Italy, Switzerland and Liechtenstein.

The country is a natural crossing point for major transportation routes between several leading business centres in both Central and Eastern Europe. There is a well-developed transportation system that includes over 130,000 kilometres of highways and over 6,000 kilometres of railways, more than half of which are electrified. The road network is used for about 1.7 million truck journeys each year while, in 1997, the Federal Railways catered for 74.3 million tonnes of goods and 190 million passengers. The country's rail-cargo companies offer a comprehensive logistics service and major international companies such as Sony and Novartis centre their distribution activities around this rail-highway link. There are approximately 350 kilometres of navigable waterways including the Danube, which has been an important method of transportation for centuries and offers a huge capacity. The Rhine-Main-Danube canal provides a direct connection between the North and Black Seas and is fast becoming one of the most important waterways in Europe in line with closer integration between Central and Eastern states. Approximately 30 million tonnes of cargo a year are shipped via Austria and in the next ten years this figure is expected to increase fourfold. Austria has four ports on the Danube including Linz, Enns, Krems and Vienna, each of which has benefited from considerable investment of almost EUR 810 million in total since 1993. The ports have efficient rail and road connections and equipment for handling a wide diversity of goods. The country has six commercial airports, the largest of which is in the capital Vienna.

According to the International Telecommunication Union, in 2000, Austria had 1,228.3 fixed line and mobile telephones for every 1000 members of the population and a total of 2.1 million Internet users. Following deregulation of the telecommunications industry in recent years, costs have fallen dramatically. In 2000 alone, fixed-line calls fell by more than 20 per cent. Annually, both global and national providers invest about €2 billion in the telecom infrastructure.

Workforce:
The Austrian workforce is characterised by highly skilled and productive employees. Between 1991 and 2000, annual growth rate in industrial productivity was third highest in the European Union at 5.44 per cent. In 2001, The World Competitiveness Yearbook placed Austria first in terms of worker motivation and third for the availability of highly educated and skilled labour. In mid-2000 the Austrian Chamber of Commerce reported that approximately 70 per cent of companies were highly satisfied or satisfied with the abilities of their employees. Furthermore, Austria has one of the lowest strike times of any EU member country. Since 1997, liberalised regulations governing working practices have increased flexibility by allowing, for example, increased daily or weekly working hours and 24-hour operations under certain conditions.

Spending on education, by both public and private bodies, is among the highest in the world. According to the OECD, Austria's investment in education was 6.5 percent of GDP, higher than many other European countries including France, Germany and the UK. Austria therefore has a good education system that offers a variety of educational pathways. There are nine years of compulsory schooling, after which the possibilities for continued education include continued general education at a higher school, apprenticeships or education at a vocational higher school. Students can attend a university or a technical high school after graduating from a higher school.

New Technologies:
A report by the European Commission in 2001, demonstrated that Austrian enterprises show high levels of innovative activity and relatively good performance in terms of innovation output. However, linkages between industrial research and universities are weak and spending on research and development could be improved. At present spending is about 2.5 per cent of GDP and past attempts to increase this have had limited success. Measures have already been taken, however, to improve the situation including additional funding being made available for research and development activities between 2000 and 2003. Furthermore, a Council for Research and Technology Development has been established to co-ordinate research efforts. The Council will advise all ministries involved in science, research and development, allocate funds for promoting research and development and be responsible for the establishment of large research projects.

Business Costs:
In "Competitive Alternatives, 2002" an evaluation of business costs around the world, the international consulting firm KPMG Austria was found to have a similar cost structure to that of France, and a significant cost advantage over neighbouring Germany. Factors that were considered included the level and type of taxes levied, real estate prices and wages.

The standard corporate tax rate for companies in Austria is approximately 34 per cent, while the average of all members of the European Union, in 2001, was 33.68 per cent. Employers' social security contributions, as a percentage of GDP, are in the middle range of most European countries. Austria also holds in excess of 40 international treaties with other nations to avoid double taxation.