Working papers, Department of Economics, WU (Wirtschaftsuniversität Wien)
Austria's Foreign Direct Investment in Central and Eastern Europe: 'Supply Based' or 'Market Driven'?
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.
Keywords: FDI; trade; internationalisation; SMEs; Central and Eastern Europe; (follow links to similar papers)
JEL-Codes: F15; F21; F23; (follow links to similar papers)
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