shares to the EU and even intra-firm trade deficits by parent firms. It is this sector in particular
where some harmful impacts on the domestic economy may occur. Nevertheless, until now this
part of FDI has only been of minor importance. At the end of 1995 just 10.5% of total FDI had
been allocated to this sector. The bulk of Austria’s FDI in the CEECs is predominantly market
driven, produced to a very large extent for local markets, encourages thereby additional
‘associated’ exports and displays intra-firm trade surpluses by the Austrian parent firms. Hence it
is very likely that these investments have brought positive net effects on Austria’s economic
performance.
* I am grateful to the Division of ’International Balance of Payments’ at the Austrian National Bank for
assistance with the data, and to the 'Jubilaumsfonds' at the Austrian National Bank for financial support
under grant 6370. The author takes sole responsibility for the use and interpretation of the data.
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