IDEAS home Printed from
   My bibliography  Save this article

Austria's "Technology Gap" in Foreign Trade


  • Gernot Hutschenreiter


  • Michael Peneder



In a long-term perspective, world trade expands much faster for high-technology manufactures than for goods with low technological content. Compared with other advanced industrialized countries, Austria exhibits a substantial "technological gap" in its foreign trade: 1. The share of high-technology goods in total merchandise exports is more than twice as high for the average of both the OECD area and the EU countries than for Austria. 2. Unit values for Austrian manufactures of high human capital content (high-technology as well as standard technology items) are markedly lower than those of other small open economies like Switzerland, Sweden or Finland. 3. Deficiencies in quality and a low degree of specialization in advanced technology goods have led to a structural deficit in foreign trade in the high-technology bracket, which is estimated at nearly ATS 22 billion for 1994. Nevertheless, a structural shift away from this unfavorable position towards a larger share of human-capital intensive manufactures may be observed for both high-technology and standard technology goods. It leads, in the longer term, to greater specialization in foreign trade as well as to gains in international market shares. Hence, Austria's share of OECD exports of human-capital intensive goods has steadily increased from a modest 0.96 percent in 1970 to 1.22 percent in 1980, 1.62 percent in 1990 and 1.55 percent in 1994. This rise extends to both high-technology and standard technology items with 1994 market shares of 0.89 percent and 1.65 percent, respectively. By way of comparison, the international market share for all manufactures was 1.89 percent. Thus, Austria, while catching up, still has a long way to go in order to advance to an international top position. In order to carry forward the process of structural adjustment, the ratio of expenditure on research to GDP will have to rise over the medium term, from currently 1.5 percent to the present EU average of around 2 percent. In absolute figures this would imply that over the next six years an additional total of ATS 40 billion be spent on research and development in the whole economy, which would boost the annual growth rate of such expenditure to 9.4 percent. The "technology billions", provided for by the Federal government for the next two years, represent a step towards closing the technology gap. However, additional resources will be required beyond this period, if Austria is actually to close the research gap vis-à-vis other industrialized countries. However, the Austrian "technology gap" will not be closed by simply spending more public money on research. Not only are there severe budgetary constraints, but also the fact that in an international comparison the government share in total R&D spending is already high. Public funds should therefore be allocated such that they have the highest possible multiplier effects in encouraging R&D in the private sector, thereby setting in motion a self-sustaining process. Prerequisites in this respect are innovations and re-allocations in subsidy schemes, the implementation of evaluation procedures, improved cooperation between the corporate sector and research institutions as well as new forms of regulation conducive to innovation, notably in markets to be liberalized such as telecommunication and energy supply.

Suggested Citation

  • Gernot Hutschenreiter & Michael Peneder, 1997. "Austria's "Technology Gap" in Foreign Trade," WIFO Monatsberichte (monthly reports), WIFO, vol. 70(2), pages 103-114, February.
  • Handle: RePEc:wfo:monber:y:1997:i:2:p:103-114

    Download full text from publisher

    File URL:
    File Function: Abstract
    Download Restriction: Payment required

    As the access to this document is restricted, you may want to search for a different version of it.


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Jan Stankovsky & Yvonne Wolfmayr, 2004. "Potential Markets for Austrian Exports," Austrian Economic Quarterly, WIFO, vol. 9(3), pages 115-126, August.
    2. Gunther Tichy, 2016. "Persistent Structural Problems in Spite of Correct Structural Forecasts," WIFO Monatsberichte (monthly reports), WIFO, vol. 89(8), pages 553-571, August.
    3. Gunther Tichy, 2015. "Austria as a Business Location – From Fast Lane to Siding," WIFO Monatsberichte (monthly reports), WIFO, vol. 88(8), pages 635-648, August.
    4. Werner Hölzl, 2003. "Tangible and intangible sunk costs and the entry and exit of firms in Austrian Manufacturing," Working Papers geewp33, Vienna University of Economics and Business Research Group: Growth and Employment in Europe: Sustainability and Competitiveness.
    5. Yvonne Wolfmayr, 2008. "Trade Barriers in Services and Competitive Strengths in the Austrian Service Sector - An Analysis at the Detailed Sector Level," FIW Research Reports series I-007, FIW.


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wfo:monber:y:1997:i:2:p:103-114. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ilse Schulz). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.