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

Provided by Research Papers in Economics

Structure and Objectives of Austria’s Foreign Direct
Investment in Four Adjacent Central and Eastern

European Countries*

Wilfried Altzinger

University of Economics and BA, Vienna, Austria
e-mail: [email protected]

Paper presented at the 38th Congress of the
European Regional Science Association

Vienna, Austria, August 28 - September 1, 1998

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.

JEL classification: F15, F21, F23.

Keywords: FDI, trade, internationalisation, SMEs, Central and Eastern Europe;

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