6. Summary and Conclusion
By geography Austria’s FDI to the CEECs is strongly concentrated in its adjacent countries (Hungary,
Czech Republic, Slovakia, Slovenia). Spatial proximity and cultural and historical affinity have enabled
Austrian companies to enter immediately the new sale markets. Thereby these companies have reaped an
essential FMA. Moreover these factors enabled Austrian companies to minimise risks and thereby even
SMEs took new opportunities for internationalisation. Investment has been performed to a large extent by
SMEs. For many of them it was the first time that to be engaged in the internationalisation process.
A breakdown by industries reveals that the non-manufacturing sector (trade, finance and insurance,
construction) have invested most strongly. Within the manufacturing sector three industries comprise the
bulk of FDI: chemicals and petroleum, food and beverages, non-metallic products. As has been shown by
the results of a survey the principal motive of these investments is ‘market access’. With the exception of
food and beverages all sectors mentioned above show an above the average reliance on market-driven
motives. There is only one sector - the so-called ‘core’ industrial sector (metal products, mechanical
products, electrical and electronic equipment and motor vehicles) - which rated low wage costs high. In
particular within this sector some new European division of labour seems to have developed. The
importance of supply-based FDI within this sector indicates that production activities and assembly are
relocated in order to gain overall competitive strength. However, although such an investment is a clear
sign of increasing cost pressure it may help to secure the home based industry.
Sale and trade patterns of Austrian affiliates in the CEECs indicate that two thirds of overall output is
sold on local markets. All industries with large FDI shares yield high local market shares. Hence for
these industries the dominance of market driven factors is strongly confirmed by these sale patterns. Only
the 'core' industrial sector indicates a strong dependence on EU markets. Within this sector the share of
local markets is only 39.3%. More than 50% of the output is shipped to the EU whilst this share is only
23.6% on average. Hence for this sector a fairly developed European division of labour seems to be
established.
Additionally overall intra-firm trade data display that much of this trade is not performed in a way that is
associated with established MNEs operating in global industries. First of all it is the trading sector which
has improved its performance by trading final goods to its affiliates. Within the manufacturing sector
only wood processing and the 'core' industrial sector show intra-firm trade deficits.
To sum up these findings Austria’s FDI in the CEECs presents a considerable push of the
internationalisation of Austria’s industry. However the internationalisation process differs from
the typical pattern stated by established theory: Austria’s FDI in the CEECs can be mainly
explained by geographical proximity and close historical and cultural ties which gave Austria a
considerable FMA. Most of the FDI has been performed by SMEs with little experience of
internationalisation. For all six industries which display strong FDI activities in the CEECs
market driven motives were of overwhelming importance. The predominance of market-driven
factors is strongly confirmed by sale patterns of the affiliates which substantiate the dominance
of local markets. However, one exception remains: the ‘core’ industrial sector rates production
cost advantages far higher than the average industry. Furthermore this sector shows high export
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