IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this paper

The Impact of Romania’s Accession to the EU on the Austrian Economy

Listed author(s):
  • Gabor Hunya


    (The Vienna Institute for International Economic Studies, wiiw)

  • Anna Iara

Romania will become a member of the European Union in 2007 or 2008. This paper explores the potential impacts of this step on Austria in three major fields foreign trade, FDI and labour market. Romania is a more backward country than those which joined the EU in 2004, but it has been on a path of rapid economic growth since 2001. The medium-term prospects of its economy depend of two main factors restructuring and improving international competitiveness, and the capacity to absorb EU funds after accession. If progress is slow in both respects, economic growth will be around 4% annually in the coming years, while under favourable conditions it may climb to 5-6%. Romania will remain a rapidly growing market for investment goods, consumer goods and services alike providing good opportunities for Austrian companies. Trade flows between the two countries are modest in 2004 Romania ranked 16th regarding Austrian exports and 21st regarding imports but is has been increasing rapidly in recent years and one may expect further strong growth. Austria enjoys a current account surplus vis-à-vis Romania. The bulk of the surplus is generated by trade in goods, most recently also through the incomes earned by Austrian subsidiaries. Migrants’ transfers from Austria to Romania are of a low magnitude, which indicates the lack of substantial migration. The recent huge investments of OMV and Erste Bank result in an Austrian FDI stock of about EUR 6 billion by the end of 2006, some 10% of the Austrian outward FDI stock. This is a similar amount as invested in the Czech Republic or Hungary, which had been the main targets in earlier years. But compared with those countries, Austrian FDI in Romania is more concentrated in a few companies and industries, and the subsidiaries in Romania are less export-oriented. We conducted a questionnaire survey in February 2006 among Austrian companies with subsidiaries in Romania in order to find out the impact of investments in Romania on Austrian mother companies. The most important impact was that the firms’ turnover increased. In the majority of cases, also employment increased in Austria, particularly in the field of management and services. The survey results confirmed that for Austria the internationalization of activities and the penetration of the Romanian market bring more benefits for employment than job losses due to relocation. Austrian companies plan further investments in Romania after that country’s accession to the EU. All respondents mention some advantage of enlargement, at least in the form of easier border crossing and more EU-financed projects. Only few companies expect a negative impact in the form of increasing labour costs in Romania. Immigration of Romanians to Austria amounted to around 39,000 persons (legal, net) during the 15 years from 1990 to 2004. In 2004, about 5500 entries of Romanian immigrants were registered, while 3500 Romanians left Austria. The difference of about 2000 persons accounted for 3.3% of net immigration to Austria in that year. Most of the Romanian nationals who immigrated to Austria in the past 15 years have established a long-term living here. Romanian employees in Austria face a slightly higher probability of unemployment and receive lower earnings than Austrian nationals. To assess the expected size of immigration from Romania to Austria in the case of free labour mobility, we discuss existing studies based on both econometric analysis and survey findings. We find that a total number of around 43,500 Romanian nationals can be realistically expected to move to Austria in the first ten years after the introduction of free labour mobility. This is 1.3% of Austria’s 2004 labour force (without the self-employed). But, EU accession will by far not mean free labour mobility. Transitional arrangements will restrict Romanian citizens’ right to assume employment in most incumbent EU member states including Austria. The main mode for Romanian citizens to legally enter the Austrian labour market will remain to be via work permits that are issued for sectors with excess labour demand only.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL:
File Function: Order URL / Description
Download Restriction: Only to order

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Paper provided by The Vienna Institute for International Economic Studies, wiiw in its series wiiw Research Reports with number 326.

in new window

Length: 36 pages including 18 Tables
Date of creation: Apr 2006
Publication status: Published as wiiw Research Report
Handle: RePEc:wii:rpaper:rr:326
Contact details of provider: Postal:
Rahlgasse 3, A-1060 Vienna

Phone: (+43-1) 533 66 10
Fax: (+43-1) 533 66 10-50
Web page:

More information through EDIRC

Order Information: Web:

No references listed on IDEAS
You can help add them by filling out this form.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:wii:rpaper:rr:326. 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: (Customer service)

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.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with 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 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.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.