A new look at German-Austrian economic relations

100 years ago, economic relations between the young republics of Austria and Germany were put on a new footing. This led to the founding of the German Chamber of Commerce in Austria in 1920. "Both historically and today, Austria and Germany are closely intertwined. This can be seen in the strong foreign trade between the two countries, as well as in close direct investment relationships," explains Wolfgang Schwarzbauer, Research Director of the economic research institute EcoAustria.

There are 4,480 German companies operating in Austria. If both direct and indirect effects are taken into account, German companies in Austria are associated with an overall economic value added of 38.4 billion euros and 480,971 employees. Of particular importance here are trade and industry, each with a direct value added of more than eight billion euros. In addition, Austrian companies export goods and services worth 70.8 billion euros to Germany, which are associated with 41.3 billion euros in value added and 436,276 full-time jobs in the economy as a whole. This applies in particular to Austrian industry.

"In terms of economic policy, both countries are currently facing similar challenges. First and foremost, we need to get through the current COVID-19 crisis well and contain the associated economic slump," says Schwarzbauer. Both countries have adopted far-reaching rescue packages for this purpose. The newly published study by EcoAustria and the Kiel Institute for the World Economy (IfW) concludes that, in addition to reducing the high tax burden and cutting bureaucratic hurdles, an improvement in the education structure and an increase in research output are particularly important in economies with a high level of development, such as Germany and Austria, if the aim is to increase competitiveness in international competition in the medium term and thus lay the foundation for growth, prosperity and employment, as well as increase resilience in future crises.