Economic effects of regional economic activity

In a recent study commissioned by the Austrian Raiffeisen Association, EcoAustria shows that regional value creation strengthens the resilience and innovative power of the domestic economy. In addition, regional economic cycles also make a significant contribution to sustainable development and environmental protection. For this reason, supporting regional economic cycles is a key component of a sustainable and resilient economic policy.

Austrian consumers increasingly prefer regional products, especially food, and are willing to pay higher prices for them. This supports local producers and strengthens the regional economy. However, regional products are under pressure as international suppliers are often cheaper and more competitive due to lower production and transportation costs. The global decline in transportation costs contributes to the fact that foreign goods are often cheaper than domestic products.

One of the approaches to at least partially compensate for this loss of competitiveness is the cooperative model. As cooperative structures promote rural diversity, region-specific initiatives such as cooperatively organized banks, purchasing groups and sales organizations contribute significantly to the resilience of a region, as the study results show. This means that regional economic cycles are less susceptible to global crises, making it possible to respond more quickly to local needs and challenges.

Innovation is also a key driver of economic development. Although Austria performs well in the Global Innovation Index (18th place out of 132 countries), the study nevertheless shows that innovation often takes place at regional level. Regions that build on their existing technological specializations can use their innovative strength particularly effectively. Regional innovation policy must therefore be decentralized, as regions have different needs and potentials. In order to strengthen the capacity for innovation in the various regions, the promotion of research and development as well as support through regional financing models are therefore particularly important.

Last but not least, the contribution to environmental protection should also be emphasized as an important aspect of regional business. Regional production and consumption reduce transportation routes and therefore CO₂ emissions. However, the reduced international transportation costs are often not environmentally friendly and do not take into account the actual social costs. This is where the study comes in and calls for increased support for regional initiatives in order to minimize the negative environmental impact and strengthen the regional economy at the same time.