Austria - Foreign investment

Between 1948 and 1954, an estimated $4 billion was invested in the Austrian economy. Austria raised foreign capital largely through loans rather than as direct investment. Many post-World War II projects were financed by US aid; US grants and loans in the postwar period totaled about $1.3 billion before they began to taper off in 1952. To stimulate domestic and foreign investment, especially in underdeveloped areas of Austria, two specialized investment credit institutions were founded in the late 1950s.

Cumulative foreign direct investment (FDI) in Austria rose from $600 million in 1967 to over $14 billion in 1992. European Union membership has had a positive impact on foreign investment and has helped to lower inflation. The annual inflow of FDI from 1996 to 1999 averaged $3.7 billion. In 2000, the FDI inflow rose to a post-World War II record of about $9 billion due to the take over of Austria's largest bank by the German Vereinsbank. The total number of firms involved in cross-border merger acquisitions was 90 in 2000, up from 54 in 1999 and 49 in 1998.

By 1998 (the latest sectoral data available), the main areas for FDI were real estate ($5.2 billion, 28.5%), trade ($3.6 billion, 20%), banking ($2.5, 13%), petroleum and chemicals ($1.8 billion, 10%), transport and communications ($1.6 billion, 8.5%), metals and machinery ($988 million, 5.4%), paper and wood ($634 million, 3.5%), vehicles ($307, 1.67%), and food processing ($291 million, 1.6%). In all, about 26% went to industry and the rest to the services sector. Close to 78% of annual FDI inflows come from five sources: Germany, 43% to 51%; Switzerland-Liechtenstein, 10% to 17%; the Netherlands, 6% to 9%; the United States, 6% to 8%; and Italy, 3% to 8%.

The Austrian government welcomes productive foreign investment, offering a wide range of assistance and incentives at all levels ranging from indirect tax incentives to direct investment grants. Of particular interest are investments in industries that are seeking to create new employment in high technology, promoting capital-intensive industries linked with research activities, improving productivity, replacing imports, increasing exports, and are environmentally "friendly." Austria has strict environmental laws, rejects nuclear energy, and has tight restrictions on biotech products. Full foreign ownership is permitted, except in nationalized sectors, and such enterprises have the same rights and obligations as domestic companies.

The total value of FDI stock in 2000 equaled $30.9 billion, about 15% of GDP. In 2001, inflow of FDI was close to $6 billion.

Annual FDI outflow from Austria came to about $3.3 billion in both 1999 and 2000, up from $2.7 billion in 1998 and about $1.9 billion in both 1996 and 1998.