ECI 2018/Q4: Austria’s competitiveness moving sideways

The competitiveness of a business location is crucial for the growth and prosperity of an economy. "While competitiveness has increased on average in the EU and in Germany, for example, in recent years, Austria is moving sideways," says Tobias Thomas, Director of the economic research institute EcoAustria. "In addition, some Eastern European countries such as Slovakia are catching up strongly and increasing competitive pressure," says Thomas.

These are the findings of the new EcoAustria Competitiveness Index (ECI), which measures the development of competitiveness on the basis of net exports and direct investments at home and abroad on a quarterly basis. With this method, the ECI complements existing competitiveness indices such as the Global Competitiveness Index of the World Economic Forum or the IMD World Competitiveness Ranking. These are partly based on surveys and are published annually. The quarterly ECI enables a more timely assessment of the development of the competitiveness of business locations.

Austria's stagnating competitiveness and the simultaneous dynamic development of similarly developed EU countries point to the need for structural reforms in this country. "If Austria wants to maintain its high level of prosperity, structural reforms are needed," says Thomas. "A noticeable reduction in the tax ratio to below 40% and a sustainable stabilization of public finances would make sense. Among other things, linking the retirement age to life expectancy and a demographically sound reform of care financing would be expedient. This can help to ensure that the currently falling national debt or the tax burden does not rise again in the medium term," says Thomas.

The current results of the ECI are presented in the EcoAustria Competitiveness Monitor Q4/2018. Details on the methodology of the EcoAustria Competitiveness Index (ECI) are documented in EcoAustria Research Paper No. 9.