Economic and research policy priorities for greater competitiveness

A joint working paper [in German] by FORWIT and the Austrian Productivity Board draws a picture of the central challenges for the competitiveness of the EU and Austria against the backdrop of global developments. On the basis of independently submitted recommendations from the two government advisory bodies, necessary and possible measures are outlined with which Austria could positively influence developments.

The analysis paints a clear picture: Europe, and export-dependent Austria in particular, is coming under increasing pressure in global competition. While the USA and China are forging ahead with targeted industrial policies and massive investments in future technologies and dominating the global innovation race, Europe is in danger of falling behind. Particularly alarming is the stagnating productivity growth in the EU, which is falling further and further behind its competitors.

Core problems of Austrian competitiveness

The analysis identifies several core problems for Austria: despite high economic output per capita, productivity has only been growing very slowly for years. In particular, the potential of the digital transformation as a key driver of productivity growth is not being utilised. The energy crisis and the associated pressure to transform are weighing on the economy. In addition, demographic change threatens to further slow down growth. The innovation gap poses an additional challenge – despite high research expenditure, scientific findings are not being sufficiently translated into marketable products.

Consistent recommendations from FORWIT and the Productivity Council

FORWIT and the Productivity Council have independently communicated ways to successfully meet these challenges in their previous recommendations. Specifically, they suggest expanding the digital infrastructure and promoting digital skills in companies and schools. In particular, the diffusion of AI technologies should be accelerated by increasing AI literacy and incentivising investment. In the energy sector, a short-term diversification of gas supply is recommended, coupled with the establishment of zero-emission transformation zones and ambitious CO₂ pricing. To strengthen human capital, more flexible childcare services, easier access to the labour market for qualified foreign specialists and the expansion of ICT and IT study places are recommended. Finally, the start-up culture should be promoted by reducing bureaucracy, simplifying investments in start-ups and providing support for scaling up in Europe.

In order not to be left behind in global competition, Austria must act decisively now. Both politicians and companies themselves are in demand. Austria can only secure its long-term competitiveness through targeted investment in future technologies, accelerated digitalisation and the creation of an ecosystem that promotes innovation.

The complete analysis ‘Economic and research policy priorities to strengthen Austria’s competitiveness’ is available for download [in German].