Austria's Foreign Direct Investment in Central and Eastern Europe: 'Supply Based' or 'Market Driven'?

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Austria's Foreign Direct Investment in Central and Eastern Europe: 'Supply Based' or 'Market Driven'?

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Wilfried Altzinger () (Department of Economics, Vienna University of Economics & B.A.)

Abstract

Since 1989 Austria's investment activities in Central and Eastern Europe has intensified. Investments are concentrated in adjacent countries. Geographical proximity and close historical and cultural ties have enabled even small and medium-sized Austrian enterprises to achieve a 'first mover advantage'. Investments have been performed to a large extent in industries that are typically not connected with outsourcing activities (trade, finance and insurance, construction). Market-driven factors and strategic considerations are the ultimate objective of these investments. Only a few sectors, in particular a so-called 'core' industrial sector (metal products, mechanical products, electrical and electronic equipment), indicate that low labour costs are of importance. Trade and sales data of the affiliates support the dominance of the local market. Whilst on average 66% of the affiliates output was sold locally this share was only 39% for the 'core' industrial sector. This sector indicates particular patterns of relocation. Nevertheless, until now this part of Austria's FDI has only been of minor importance.

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Paper provided by Vienna University of Economics and B.A., Department of Economics in its series Department of Economics Working Papers with number wuwp057.

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Date of creation: Apr 1998
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Handle: RePEc:wiw:wiwwuw:wuwp057

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Find related papers by JEL classification:
F15 - International Economics - - Trade - - - Economic Integration
F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

References listed on IDEAS
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Françoise Lemoine, 1998. "Integrating Central and Eastern Europe In the European Trade and Production Network," UCAIS Berkeley Roundtable on the International Economy, Working Paper Series 1063, UCAIS Berkeley Roundtable on the International Economy, UC Berkeley. [Downloadable!]

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Wilfried Altzinger, 1998. "Structure and objectives of Austria's foreign direct investment in the four adjacent Central and Eastern European countries Hungary, the Czech Republic, Slovenia and Slovakia," ERSA conference papers ersa98p74, European Regional Science Association. [Downloadable!]

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