Austria - Economic development



The federal government held a majority share in two of the three largest commercial banks and all or most of the nation's electricity, coal and metal mining, and iron and steel production, as well as part of Austria's chemical, electrical, machine, and vehicle industries. The republic's share in the nationalized industries was handed over on 1 January 1970 to the Austrian Industrial Administration Co. (Österreichische Industrieverwaltungs-Aktiengesellschaft—ÖIAG), of which the government was the sole shareholder. The ÖIAG, in line with the government's industrialization program, regrouped the nationalized industries into six sectors: iron and steel; nonferrous metals; shipbuilding and engineering; electrical engineering; oil and chemicals; and coal. This was later regrouped into five sections: steel; metals; machinery and turnkey operations; electronics, petroleum, petrochemicals and plastics; and chemicals, pharmaceuticals, and fertilizers.

The nationalized establishments operated according to free-enterprise principles and did not receive tax concessions. Private investors were subsequently allowed to buy shares in them. The government, however, maintained voting control in these transactions. The legislation providing for ÖIAG's reorganization of the iron and steel industry included codetermination provisions granting employees the right to fill one-third of the seats on the board of directors. The postal, telephone, and telegraph services and radio and television transmission were state monopolies, as was the trade in tobacco, alcohol, salt, and explosives.

During the 1970s, the government placed new emphasis on centralized economic planning. Key elements in the new policy were the planning of public investment, selective promotion of private sector investment, coordinated expansion of the energy sector and state-owned industry, and assistance for the structural improvement of agriculture. Special emphasis was given to the reform of the handicrafts industry.

In 1986, the ÖIAG was renamed the Österreichische Industrieholding AG, and a process of restructuring and privatization took place in 1993. In 1996, the post and telecommunications monopoly was privatized, and other companies were split up and taken over by foreign, and especially German, companies. The agricultural sector has gone through substantial reform through the European Union's (EU's) common agricultural policy. Since becoming an EU member in 1995, Austria's economy has become more integrated with the EU's other member countries, and trade with central and east European countries has increased. Industry remained strong in the 1990s and into the early 2000s.

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