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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.

Suggested Citation

  • Wilfried Altzinger, 1998. "Austria's Foreign Direct Investment in Central and Eastern Europe: 'Supply Based' or 'Market Driven'?," Department of Economics Working Papers wuwp057, Vienna University of Economics and Business, Department of Economics.
  • Handle: RePEc:wiw:wiwwuw:wuwp057
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    References listed on IDEAS

    as
    1. Lemoine, Françoise, 1998. "Integrating Central and Eastern Europe In the European Trade and Production Network," UCAIS Berkeley Roundtable on the International Economy, Working Paper Series qt5r66s4ng, UCAIS Berkeley Roundtable on the International Economy, UC Berkeley.
    2. Borsos, Julianna & Erkkilä, Mika, 1995. "Foreign Direct Investment and Trade Flows between the Nordic Countries and The Baltic States," Discussion Papers 540, The Research Institute of the Finnish Economy.
    3. Christian Bellak, 1997. "Austrian Manufacturing MNEs: Long-Term Perspectives," Business History, Taylor & Francis Journals, vol. 39(1), pages 47-71.
    4. repec:wfo:wstudy:2437 is not listed on IDEAS
    5. repec:wfo:wstudy:2308 is not listed on IDEAS
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    More about this item

    Keywords

    FDI; trade; internationalisation; SMEs; Central and Eastern Europe;

    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

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