Download The investment development path of Austria

Vienna University of Economics & B.A.
Department of Economics Working Paper Series
THE INVESTMENT DEVELOPMENT PATH OF AUSTRIA
Christian Bellak*
Working Paper No. 75
November 2000
Abstract
We explore some empirical properties of Austria’s "Investment
Development Path" (IDP) on the macro level as well as on the
structural and the bilateral level. Three dimensions are analyzed,
namely the growth, the stability, and the sign of the Net Outward
Investment Position (NOIP). While the NOIP on the macro level has
been negative throughout the last two decades, there is considerable
variation on the industry and the bilateral level. Given the small
domestic market size, the NOIP of Austria does not reflect the high
level of development in terms of GDP. Several explanations for the
below-average NOIP of Austria are provided.
Keywords: Foreign Direct Investment; Austria; Multinational Enterprises
JEL-Code: F21, F23, O10
Adress of the author:
Vienna University of Economics & B.A.
Augasse 2 - 6, 1090 Vienna, Austria
[email protected]
______________________
* Revised and extended paper presented at the ITFA (Montpellier, June 2000). Comments by
Francisco Castro, Peter Gray, Rajneesh Narula are gratefully acknowledged.
1. Introduction
Small countries differ from large countries in many respects. This is also true with regard to
FDI. As a latecomer in foreign direct investment (FDI) among the highly developed small
countries1 in Europe, Austria shows several distinctive features of its internationalization path,
which are worth mentioning. First of all, its FDI stocks, both outward and inward are well
below those of higher developed countries in Europe (in terms of GDP p.c.), but also well
below less developed EU countries like Ireland (see Appendix Figure 1). Second, inward FDI
stocks have always exceeded outward FDI stocks since data on book values have been
compiled in bi-annual surveys by the Austrian National Bank. Third, today's backward FDIstock position is the result of very low FDI-flows since 1960, as Appendix Figure 2 shows. A
take-off only occurred during the 1990s, with substantial increases in outward but also inward
FDI flows.
The major approach relating FDI and development is the so called "investment-development
path" (IDP) model (see Appendix Figure 3). It has been developed in the 1980s (see e.g.
Dunning, 1981) and has undergone some refinement and evolution itself (see section 2). The
IDP model maintains that structural change has a systematic relationship with patterns of FDI.
Therefore, national economies (i.e. their production structure, technical infrastructure and their
institutional set-up) exert a strong influence on the net outward investment position (NOIP).
Thus the rate of structural change and the development of the NOIP have common
determinants. Since the structural characteristics of a national economy are realized by firms to
a different degree (innovative, mature, growth industries etc.), their FDI activities (inward and
outward) vary substantially. The IDP model identifies five stages of an idealized (NOIP)2 of a
1
2
GDP p.c. in 1998 = 23.725 USD (PPP; current exchange rate). Size = 83.000km2.
The NOIP is defined as the difference between outward and inward FDI stocks p.c.
2
country, which are related to its level of development (GDP p.c.) (see Dunning and Narula,
Chapter 1, for a detailed overview).
At first glance, a comparison of Appendix Figures 2 and 3 points to some difficulties to
establish the idealized relationship empirically for Austria. This raises the question whether
Austria's NOIP follows the suggested IDP and which stage(s) should be attributed to Austria.
Though some studies have assessed structural change in Austria (e.g. OECD 1995) and
revealed structural problems, this has never been linked systematically to Austrian FDI. This
paper is an attempt to fill the gap. Since the overall level of development of a country no
longer is a good predictor of its NOIP at high levels of development (Narula 1996), a closer
look on the structural and bilateral level NOIP shows a large variation of the NOIP by
industry-type and type of partner country. If domestic industrial and geographical
diversification is limited and the openness is high, which are typical characteristics of small
countries, the structural characteristics of only few home/host countries and industries
dominate the IDP together with the external environment. The paper concludes that the belowaverage NOIP of Austria is the result of a lack of ownership advantages of Austrian firms, a
high level of initial inward FDI stocks, favorable and improving location advantages and the
integration policy towards EFTA and EU followed by the Austrian government.
The paper starts with a survey of earlier studies on the NOIP (section 2), followed by a
theoretical discussion of the determinants of the NOIP of a country (section 3). It proceeds
with a description of Austria's macro, structural and bilateral NOIP (section 4). Section 5
concludes.
3
2. Earlier Studies
Several econometric and descriptive studies have been carried out to test whether the
postulated relationship can be confirmed empirically. The total number of empirical studies of
the IDP is about 20. This subsection summarizes the main empirical and conceptual findings of
these studies, which are relevant for the Austrian case.
Dunning (1980) asserts that the competitive advantage of a country's enterprises in servicing
foreign markets is determined by the ownership advantages of those enterprises relative to
those of enterprises of other nationalities, and the relative location advantages. He finds that
the "skilled employment ratio" and the "relative market size" are the main explanatory factors
for exports plus foreign production of US firms in seven countries.
Dunning (1981, 1982) maintains that the future of the NOIP of developed countries will rest
more on their relative status, reflected in and determined by the balance of their OLI
advantages. Deviations of countries from the idealized (average) NOIP are explained by
differences in the economic structure of countries. Countries, which record NOIPs below the
average, are such as to generate below average ownership advantages for their enterprises, and
/ or below average incentives for them to internalize these advantages, coupled with above
average location-specific advantages, such as to encourage inward and discourage outward
investment.
On the basis of an analysis of 25 developing countries' NOIPs, Dunning (1986) concludes that
their transnational corporations (TNCs) derive their ownership advantages from individual or
unique asset advantages, suggesting the appropriateness of a factor endowment model. First
world TNCs, on the other hand, derive many of their ownership advantages from internalizing
a series of separate overseas activities, thus avoiding transaction costs of the market. Hence, a
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market-failure model is more likely to explain the firm-specific advantages in this case. This
result suggests that it is important to distinguish ownership advantages by type.
Tolentino (1993) examined the NOIP of 30 countries on a cross-sectional and longitudinal
basis. FDI flow data are used. Tolentino concludes that albeit some significant relationship
exists between NOIP and GNP p.c. during sub-periods, the structural change that occurred
during the period surveyed, was sufficiently large to nullify such relationships. Another finding
is that the relationship between NOIP and GNP p.c. has become inverted since the mid-70s
(from J-shaped to inverted L-shaped). Narula (1996) points out that this could be due to the
use of flow data (see below). An empirical result with particular relevance to Austria is that
traditional host countries, which have a large stock of inward investment tend to have a high
amount of reinvested profits. Therefore, their NOIP will be lower than average. She
emphasizes that especially the fifth stage is less dependent on the level of development of a
country. Time-series analysis does not yield any significant relationship between NOIP and
GNP p.c. for Austria, which may reflect the high stage of development of Austria, and a
negative sign for GNP p.c. between 1960-84.3
Pichl (1989) shows on the basis of FDI flows of 18 countries, that small, highly developed
countries (including Austria) have a higher share of inward FDI in GDP than large countries.
This points to an efficiency-type of FDI, since the markets are (by definition) small. Inward
FDI was efficiency seeking for re-exporting, taking advantage of the combination of a highproductivity location and the free-trade status of Austria vis-á-vis the EU. Outward FDI on the
other hand, is not dependent on country-size, here firm-specific attributes and the level of
development are the main explanatory factors.
Dunning and Narula (1994) applied the IDP model to explain the level and structure of USJapanese FDI. The difference between natural and created assets is highlighted. An effect of
3
This rests, however, on the wrong view that Austria is a substantial outward investor.
5
ownership advantages on location-advantages of the host country (and vice versa) is described.
This could be relevant, e.g., in the Austrian - German case, where the Austrian location is
affected positively by German firms, exploiting their ownership advantages. Dunning and
Narula propose two modifications to the original IDP model: first, the inclusion of macroorganizational policy variables and second the importance of acquisitions of ownership
advantages. In the light of the latter, a negative NOIP points to a strength of an industry, rather
than a weakness. As acquisitions are predominant over green-field FDI when foreign firms
enter Austrian markets, the possibility of complementary ownership advantages has to be
examined.
Narula (1996) presents results based on FDI stock data of some 40 developing countries. His
results contradict Tolentino's results (see above) and confirm the J-shaped NOIP for 1975 and
1988. The difference is explained to a large part by the use of flow-data by Tolentino and of
stock data by Narula. This implies inter alia different valuation of flows (at current values) and
of stock (at historical values) and a different impact of prices on FDI (such as exchange rates,
inflation rates). Narula maintains that countries entering the fifth stage experience economic
convergence and their investment patterns become increasingly similar.
Dunning and Narula (1996) present several country studies by various authors. In a summary,
Sanjaya Lall emphasizes that the NOIP is highly variegated and though countries may follow
the idealized NOIP, differences between countries may remain quite large. Structural change
has a systematic relation to patterns of FDI, but these are hardly generalizable. The country
studies in this volume raise a number of issues relevant for the Austrian case (like EU
membership, balance of technology trade [Ozawa 1996] etc.). Dunning and Narula emphasize
the idiosyncratic nature of the IDP. With regard to country (market) size, the proposition of an
above average NOIP for small countries in earlier periods is put forward on the grounds that
the lack of economies of scale more or less inhibits inward FDI and that indigenous firms are
6
pushed to international markets in order to achieve economies of scale. A similar argument is
put forward by Buckley and Castro (1999). Further, the results of Narula (1996), i.e. a Jshaped NOIP, are confirmed for 1980 and 1992. A division of countries in natural and created
assets results in an upward vertical and horizontal shift of the NOIP to the left, reflecting
stronger outward FDI of "created asset" countries at an earlier stage of development.
Buckley and Castro (1998) analyze the IDP of Portugal, another small country, and find a
novel relationship between the NOIP and development, between 1943 and 1996. The quadratic
function is replaced by a polynomial function, which better fits the IDP model.
Three other macro studies on the wider problem of the net-external asset position (NEAP)
include the NOIP (as one component of the NEAP) as well (see Gundlach et al. 1990; Sinn
1990; Scheide 1993; and Lane 1999). According to these studies, persistent negative levels of
the NEAP may be given, as long as their main determinants do not change and hence there is
no pre-determined level of the NOIP of countries. On the basis of 145 countries, Sinn (1990)
concludes that changes in the NEAP do not follow any predictable pattern and there is no
general relationship between the level of a country's NEAP and the welfare of its citizens. This
implies that the relevance of the NEAP for economic policy making is limited and stands in
some contrast to the IDP model. Lane (1999) estimates the determinants of the Austrian and
other developed countries net-FDI-position and finds that while "trade openness" and "country
size" are less important, "output per capita" is significant. His interpretation is that this
"reflects the greater propensity of firms in the most advanced countries to establish foreign
affiliates and, conversely the relative attractiveness of these countries as host locations for
foreign direct investment." (ibidem, p. 19)
Summarizing the empirical studies, several features are worth mentioning:
(1) Cross-sectional analysis often leads to a clustering of observations, which is not present as
a time-trend. Longitudinal studies are, however, constrained by the lack of data.
7
(2) J-shaped or inverted L-shaped curves are highly sensitive to assumptions and country
samples, but stock data yield better results than flow data.
(3) Partial FDI flow data, widely used in these studies, due to their exclusion of re-invested
earnings, give a biased picture of the NOIP. FDI stocks are a much better proxy for the
extent of international production.
(4) Empirical evidence in general is less consistent at developed country level, which
emphasizes the importance of further studies. One explanation may be the very nature of
stage 5, which can be associated with a positive or negative NOIP.
(5) Ownership advantages are more similar within an industry across countries than across
industries within a country. Yet, since ownership advantages cannot be observed
empirically, proxies are used to estimate their existence and influence on the NOIP. Also,
the type of ownership advantage is relevant, because the nature of O-advantages may
change over time. Viewed from an investor country, asset-based O-advantages are more
important in explaining the initial act of FDI and thus relevant in stages when outward FDI
starts to grow on the basis of additional firms investing abroad. Transaction-based
ownership advantages are determinants of subsequent expansion abroad and are thus
relevant in more mature stages of an investor country (and vice versa for the host country
view).
(6) General created location advantages converge as countries progress to higher stages of
development.
(7) IDPs are idiosyncratic, due to the importance of the national environment and policies,
which are major determinants.
(8) With the exception of Portugal, only large countries' IDPs have been analyzed so far.
8
3. Theoretical background: Small Countries' IDPs
In its earlier versions, the IDP model maintained that the NOIP depends on the level of
development of a country. The studies surveyed above made clear, that structural features of
the home and host country like the technological level, the mix of tangible and intangible
resources etc. and the rate of convergence4 are important determinants. In addition, factors
promoting agglomeration (like scale economies, learning effects, externalities) or dispersion
(like congestion externalities, certain market structures, increase of factor mobility) of firm
activities influence the IDP. Increasingly, additional explanatory variables were used in studies
of the NOIP. Just as FDI in general, the NOIP is determined by the interaction of firm- and
location-specific factors in each stage of development of a country. Since the NOIP of a
particular country is defined as the net result from indigenous firms' activities abroad and
foreign firms' activities in the country, firm-related variables have been increasingly used in the
analysis. The main variables and indicators used are summarized in Appendix Table 1.
Here, we are concerned with a small country. Small countries are, inter alia, characterized by
four structural features, which are relevant for their FDI:
§
A limited number of other countries, mostly neighboring, account for the major share of its
trade (low geographical diversification).
§
Though its contribution to world exports is small, exports relative to production are large
(high degree of openness).
§
A high dependence on the external environment (exchange rate, integration, tariffs and
NTBs etc.).
§
4
A low degree of industrial diversification, coupled with imports of investment goods.
See Narula and Dunning (2000) for a more detailed discussion.
9
In order to assess the impact of small country characteristics on its IDP, two concepts –
following Clegg and Ozawa in Dunning and Narula (1996) - are used, namely the structural
and the bilateral IDP. The structural IDP reflects an industry's position vis-à-vis all its
competitor's abroad. It is ownership-advantage driven and compares outward FDI of the
industry in question to the inward FDI of the same industry in the rest of the world. The
bilateral IDP reflects a country's NOIP vis-à-vis one other country. It is location-advantage
driven. Therefore, the structural IDP covers a single industry but all countries, the bilateral
IDP covers all industries but a single home/host country.
4. The Austrian IDP in Some Detail
A Note on Data
Data are taken from the Austrian National Bank survey on inward and outward FDI stocks.
They reflect book values at historic cost. The problems demonstrated by EUROSTAT and
others concerning asymmetries in the bilateral investment positions of countries in balance of
payments (BoP) statistics, resulting from different definitions applied by the national compilers,
are a major limiting factor for cross-country comparisons and they are even more pronounced
in comparisons of one country to the "rest of the world", which is done here. Such problems
are largely avoided in this analysis, since first we do not use BoP statistics and second, the
Austrian FDI stock data closely follow the recommendations of the IMF and OECD
benchmark definition.
Yet, a valuation problem with two dimensions remains: First, the age of inward and outward
capital stocks might differ, which suggests a stronger re-valuation to replacement values, the
older the capital stock. This applies to inward FDI stocks in Austria. Second, when valued at
market prices, the Austrian NOIP becomes even more negative, due to the higher profitability
10
of inward affiliates than outward affiliates, which is partly an effect of the different maturity of
these two groups of firms.
The more independent ownership advantages of firms become from the overall country
conditions, the more important is the analysis on the industry level. (Narula 1996) Dunning and
Narula (1996, p. 36) note that the IDP represents a paradigm that encapsulates complex
phenomena which are exceedingly averse to aggregation. Moreover, the crucial ownership
advantages are industry- and firm-specific rather than country-specific. The NOIP is analyzed
on the macro, the structural and the bilateral level in two dimensions in order to identify the
stage of the IDP model: (a) the development of the NOIP over time and (b) the sign of the
NOIP. Due to the lack of consistent data on the industry level over time, the analysis remains
largely of a descriptive nature (see Appendix Table A1).
The macro level
Austria’s NOIP is shown in Appendix Figure 4. (Appendix Figure 5 shows the p.c. NOIP in
greater detail, following a polynomial trend.) On the macro level, the NOIP has been negative
throughout, thus suggesting either a stage two or a stage five position for Austria as a whole.
While the growth of FDI stocks was on a slow pace until the mid-90s, since then the growth of
outward and inward FDI stocks increased (in accordance with Appendix Figure 2 above), the
latter even more. A cubic specification of the IDP yields significant explanatory variables.5 Yet,
the number of observations and the short time period do not allow us to draw any firm
conclusions from this.
5
NOIPp_c = 0.94y -128.5realGDPp_c + 262.5realGDPp_c3 - 135.1realGDPp_c5
(-5.57)
(5.70)
(5.85)
t-values in brackets; standardized parameter estimates; all coefficients significant on the 5% level; adjR2 =
0.86, N=21, DF=20. The software SAS V8.0 was used for an OLS estimation. The significance and the signs of
the coefficients remain largely the same in an alternative specification without normalization.
11
The structural level
Looking at the NOIP on the structural level reveals, that it is mainly the service sector, which
accounts for the deterioration of the NOIP (cf. Appendix Figure 6)6. The manufacturing sector
seems to have increased its competitiveness, inter alia its productivity-growth has been very
high during the 1990s. Austria’s productivity growth showed a catching-up process to
Germany from the 1960s onwards, when the productivity gap was 1.0 percentage points and
was finally closed during the 1990s. The average annual productivity growth of the
manufacturing sector was 4.6% in Austria and 3.5% in the EU (1990-1999). Even during years
of a general productivity growth slowdown (e.g. in 1999), Austria’s growth rate of 3.6% was
well above the EU (+2.7%). During the same period (1990-1999) annual average unit labour
costs decreased in Austria by –0.4%, which was in line with the EU. (Guger 2000) On the
structural level therefore, the picture differs from the macro level insofar, as there is a clear
fluctuation around a mean value of -30.
Table 2 shows the sector structure and the degree of inward and outward internationalization
by industries and employment. It is evident, that with both, inward and outward FDI, the
sector structure is in clear imbalance with the degree of internationalization: Sectors with the
highest degree of internationalization (like NACE 17-19, 23-25, 26 for outward FDI; and like
NACE 17-19, 23-25, 30-33 for inward FDI) do not have a particular high weight in foreigncontrolled employment (employment abroad, respectively) and the inter-industry variation is
high. This points to the sector-specific nature of the NOIP and suggests that a few industries
dominate the IDP. (See Appendix figures 7-10.)
The pulp and paper industry (NACE 21-22) has been chosen here as an example, not only
since it is an important industry based on natural resource endowment and because of its high
6
The structural level implies an additional problem, namely that of industry classification by home or host
country, which differs substantially, if cross-investments are high.
12
capital- and technology-intensity, but also since it is a dynamic industry with regard to foreign
takeovers and Austrian investment abroad. (cf. Appendix Figure 10) While the NOIP of the
pulp and paper industry has been close to zero until the mid-1990s, it became highly negative
in the late 1990s. This development was brought about not only by an increase of inward FDI,
but by a parallel decrease of outward FDI, partly due to takeovers. The guess here is that the
Austrian pulp and paper industry has lost competitive advantage vis-à-vis its foreign
competitors. This loss may be temporary and the sign of the NOIP could change again, if this
were a stage 5 position.
The bilateral country level
Interesting patterns emerge on the bilateral level, too. For this purpose and in order to avoid a
bias with respect to differences in country size, the figures for Germany and the US have been
normalized by their domestic population. This normalization measure shifts the two curves to a
different degree, hence their relative position to each other changes. (cf. Appendix Figures 11
and 12 [14 and 15, respectively]).
With Germany, by far the most important home and host country for Austrian FDI7, the total
NOIP (cf. Appendix Figure 11 and 13 for the p.c. NOIP) has been negative throughout, but
the normalized NOIP (cf. Appendix Figure 12) has improved steadily. Whether this reflects an
increase of firm-specific advantages of Austrian firms vis-à-vis their German competitors is
uncertain, since the total amount involved is still very low, thus a single project may change the
direction or even the sign of the NOIP. The dominance of Germany suggests a high correlation
with the macro IDP. The Pearson correlation coefficient between the total NOIP and the
German-Austrian NOIP is indeed 0.35. Combined with the quantitative dominance, this points
to a domination by few home/host countries.
7
In 1997, Germany accounts for 47 percent of Austrian inward and 16 percent of Austrian outward FDI stocks.
13
With the US, the picture is different, although a constant increase of the initially negative NOIP
(cf. Appendix Figure 14) can be seen in absolute terms, while the normalized NOIP (cf.
Appendix Figure 15) again has been positive during the last 20 years. The US-Austrian NOIP
has improved steadily, but fluctuates around an increasing mean value, a sign of a "stage 5"
relationship.
The empirical evidence presented for Austria suggests two sets of questions:
1.
Which stage should be attributed to the Austrian IDP position?
While the high level of development of Austria suggests a "stage 4 or stage 5 position", the
constant deterioration of the NOIP (rather than a fluctuation) points to a "stage 2 position". As
has been outlined above, stage 4 is typical for developed countries which are late investors,
while stage 2 is associated with developing countries which attract inward FDI based on
location factors "beyond the natural endowment".
Appendix Figure 16 provides an indicator which may help to clarify the issue. In this figure, the
NOIP is depicted as a fraction of Austrian inward FDI stock. Thus, a value of zero indicates
that outward and inward stocks are in balance. Interestingly, strong fluctuations may indeed be
seen, with one equilibrium around -0.75 during the first decade and another equilibrium around
-0.3 in the second decade, after a short, but steep shift. Of course, the time-span is too short to
say anything about the stability of such an equilibrium around a certain mean value. Although,
the whole picture is certainly not in contrast with the stage 5 hypothesis, the fact that the NOIP
is negative throughout remains ambiguous still. The lack of stage four becomes apparent and
raises the question whether Austria surpassed this stage or still remains in an earlier stage.
Box 1. "Stage 5 vs. Stage 2"
Signs in favor of a stage five position are:
§ A large number of acquisitions by foreign firms (complementary asset-seeking FDI) in
Austria points to a certain level of firm- and location-specific advantages.
§ The NOIP is small relative to the volume of inward and outward FDI.
§ Agglomeration advantages (e.g. automobile cluster) favor inward investment in few
industries.
14
§
Fluctuating NOIPs on the bilateral and structural level.
Signs in favor of a stage two position are:
§ A lack of O-advantages, namely technological weakness (e.g. negative technological BoP)
points to a limited potential to create O-advantages.
§ Also a low profitability of Austrian affiliates compared to foreign-owned affiliates points to
a low competitiveness (or initial losses, see below).8
§ A chronically negative NOIP and its deterioration over the last two decades points to
further structural weaknesses (as discussed further below).
§ The majority of the Austrian investors abroad are small firms: In 1997, firms below 50
employees in the manufacturing sector accounted for 51% of all domestic employment of
outward investors and for the same share in capital invested abroad. The shares were 10%
and 11% for firms above 500 employees. A characteristic of a mature investor country
would be that it has large TNCs, which base their O-advantages primarily on internalization
advantages rather than unique assets. This is clearly not the case for Austrian TNCs. The
size distribution has been remarkable stable between 1989 and 1997.
§ Austria is still a young investor country.9 (Bellak 1997)
One additional problem which emerges here is the fact that some of the Austrian outward FDI
stock is actually made by subsidiaries of foreign TNCs (the "ultimate beneficial owner")
located in Austria. Such FDI is termed indirect FDI. If figures on outward FDI also include
indirect FDI, one might wrongly attribute an ownership advantage to the foreign subsidiary in
Austria, where it should be attributed to its parent (which developed it and transferred it later
to the subsidiary in Austria). For Austria, this is the case with Switzerland (and also with
Eastern Europe). Switzerland appears as a prominent investor, but if corrected for the
"ultimate beneficial owner", loses significance towards the US, UK etc. (Bellak 1998).
2. What are the "structural features" mentioned in the IDP-model that help to explain
the deviations of Austria from the ideal path?
Countries (like Austria) which record NOIPs below the average are such as to generate below
average ownership advantages for their enterprises, and / or below average incentives for them
8
The share of profitable affiliates in total in 1997 was 53 percent for Austrian affiliates abroad and 56 percent
for foreign-owned affiliates in Austria. Yet, the profitability of the former is improving.
9
Affiliates are rather small (65 percent of affiliates account for 52 percent of equity abroad in 1997, while the
largest 1.8 percent account for only 12 percent) and still in the mid-1990s, most affiliates are not break-even.
15
to internalize these advantages, coupled with above average location-specific advantages, such
as to encourage inward and discourage outward investment. Strength in inward FDI paralleled
by weaknesses in outward FDI may thus result in a negative NOIP.
First of all, despite the strong growth of GDP p.c. (in real terms) during 1980-2000, the
Austrian NOIP not only remained negative, but deteriorated steadily. The development of FDI
flows (as shown in Figure 2) does not provide any indication that the situation might change in
the near future.
The assessment of the factors explaining the deviation from the ideal path includes (a)
Alternatives to FDI; (b) O-advantages of domestic firms; (c) L-advantages; and (d) Macroorganizational policies.
(a) Alternatives to FDI
The alternatives to FDI, namely exporting and licensing in a wider sense, are of different
importance. Exporting plays a major role in foreign market servicing, especially, since market
access to EU markets has been liberalized from the 1960s onwards. This favored exporting
over other routes of market servicing, especially for smaller firms. Since Austrian firms have a
very limited geographical diversification, transport costs do not play an important role in the
overall cost structure of most firms.10
Licensing and related contractual forms were not an alternative to FDI in the Austrian case:
The technological balance of payments (TBoP11) shows a coverage ratio12 of only 27% (1997).
Also, the TBoP has not increased much, neither in value terms nor in volume, which is an
indication that despite the rising FDI, contrary to expectations, contractual forms did not
10
There are certainly exceptions, where the existence of transport costs stimulates foreign production, i.e. in the
case of one of the largest TNCs in Austria in the bricks industry. Bricks are a non-tradeable good.
11
TBoP covers earnings from property rights (such as patents, licensing, know-how) as well as producerrelated services (such as engineering, design).
12
(earnings / payments) * 100
16
develop as a complementary means. A comparison of licensing and management fees paid by
inward investors to their foreign owners and by outward investors to their Austrian owners
reveals that in 1997, Austrian firms received only one fourth (ATS 1.62 bn) of what foreign
firms received from their Austrian affiliates (ATS 6.35 bn). This is also an indication for a lack
of O-advantages as discussed below.
(b) O-advantages of domestic firms
Technology may either be created or bought in the market. Yet, while the first way creates
indigenous capacity, the second way creates dependence, although one has to admit that the
latter might be the basis for catching-up and a change in the trajectory followed. The first way
may include R&D in domestic or foreign firms, while the second way refers to (i) technology
import embodied in final goods and (ii) technology transfer via FDI (i.e. the transfer of a
property right to a subsidiary). Given the importance of exporting, the trade structure also
shows some weaknesses as the share of high-tech exports in Austria’s total exports. Despite an
increase of this share between 1961 and 1991 from 1.3 to 6.8 percent, it remains well below
the OECD average of 8.3 and 15.9 percent. This important structural feature of a nettechnology importer is a further hint towards the lack of the potential to create firm-specific
advantages and reflects certainly a structural weakness of a highly developed country. Marin
(1988) provides empirical evidence that imported technology embodied in investment goods in
the textile industry (i.e. machinery) is a major source of international competitiveness.
Hutschenreiter and Kaniovsky (1999) provide evidence for Austria that direct R&D-spending
accounts for only 50 per cent of total R&D embodied in final goods and that over time, the
share of imported technology increases in Austria. The weak technological base of Austrian
17
firms not only inhibits outward FDI, but also is a limiting factor for asset-seeking inward FDI.13
Assuming the effect of the former to be larger would result in an even more negative NOIP.
(c) L-advantages
The historical record of Austria’s post-war recovery is impressive (see Bellak 2000 for an
overview) and is partly rooted on favorable location factors. Starting from per capita GDP of
84% (relative to EU-12=100) in 1950, Austria surpassed EU-12 in 1970 (101%) and in 1994
reached a level of 113% compared to EU-12. The average growth-rate of Austrian real GDP
p.c. between 1960 and 1990 was 3.1 percent as compared with an OECD average of 2.6
percent.
The growth-rates of productivity for Austria reveal that it was higher than the average for
developed countries during all periods. In the 1960s the gap was 1.0 (5.4 vs. 4.4 average
annual percentage change 1964/73), in the 1970s 0.4 (2.9 vs. 2.5); in the mid-1980s to mid1990s 2.5 and almost twice as high as Germany’s (5.4 vs. 3.0 per cent). It is thus only
comparable to growth-rates achieved in Finland. Even in recent years, when productivity
growth tended to slow down in many countries, Austria’s growth rates were still outstanding.
Surprisingly, the high growth of GDP and productivity has been achieved by a rather low
R&D-expenditure in GDP (e.g. in 1995: 1.51 percent; Germany 2.27 percent). The growth of
total R&D-expenditure between 1981 and 1991 measured in percent of GDP was 0.33
(Germany: 0.57). Foreign Transnational Corporations contributed particularly to the closing of
the technology gap.
Koman and Marin (1997) estimate the role of human capital for Austria’s macroeconomic
growth 1960-92. Using 1960 as the base year (= 100), the index of ”years of schooling” (used
as a measure of the quality of ”human capital” inputs) increases to 106.3 (114.1) for Austria
13
A similar development is reported for Portugal (cf. Buckley and Castro 1998, 1999).
18
and to 109.5 (127.6) for Germany in 1992. The estimated contribution of ”human capital” to
total factor productivity growth during this period is 9 per cent for Austria and 17 per cent for
Germany. (ibidem, Table 10) The convergence in income levels with Germany was achieved in
Austria with a relatively low contribution of ”human capital” which is also reflected to some
extent in the structure of exports.
(d) Macro-organizational policies
Two political events brought severe structural change and competition to the Austrian
economy during the period under consideration here. These were the EU accession and the
opening of the Central and East European countries (see e.g., Bellak 1996 for a discussion).
Both events had substantial, though different impacts: For the small Austrian firms, the small
home market was not a limiting factor, since a free trade agreement with the EU existed
already. For a long time scale economies could be exploited via exporting, given the favorable
location advantages at home. (see above) Hence, EU-membership brought little changes for
market access of Austrian firms, despite the number of outward investors increased somewhat.
In the case of Austria, country-size seems to having been less relevant as a determinant for
outward FDI compared to firm-size.
Inward FDI, by EU and non-EU firms, has increased substantially after 1995, which was due
to the reduction of uncertainty about the future integration strategy of Austria. On the other
hand, Central and East European countries have become important host countries for Austrian
firms and destinations for Austrian exports. Consequently, Austria became a major investor
country in Central and Eastern Europe after 1989.14 As a result of the two developments
14
The hope to attract inward FDI to set up regional headquarters responsible for CEECs, mainly in the Vienna
region did materialize to a certain extent, but is not very important in terms of capital transferred.
19
described, 67.3% of total inward FDI stocks originated in the EU and 27.3% of Austrian
outward stocks were located in Central and Eastern Europe in 1997.
5. Summary
This paper showed that Austria is an ”outlier”, when its IDP is compared to the ”idealized”
IDP. Since the latter does not maintain to explain an individual country’s NOIP, several
explanations have been advanced. Austria’s NOIP is attributed to the particular problems of
small countries and to institutional factors as well as to geography to some extent.
While the original IDP model was developed on the macro-level, here the macro-IDP is broken
down into a structural IDP (which is largely O-advantage driven) and a bi-lateral IDP (which is
largely L-advantage driven). Table 3 presents a summary and examples. Since the NOIP is
derived on a net-basis, its level, growth and stability can be assessed only by analysing its two
components , namely inward and outward FDI separately.
Finally, the IDP model has been increasingly transformed to take into account the structure of
the home country as a determinant of its IDP. There is no reason to believe, that the shape of
small countries' IDPs differs systematically from that of large countries. As the case of Austria
demonstrates, the IDP is highly idiosyncratic, but the underlying factors may well differ from
those relevant in large countries. The determining factors of the IDP seem to be the
geographical and the industrial structure of domestic industries and the policies pursued, rather
than the general level of development. Thus, for example, single industries or host countries
may reflect a stage five position, while the whole country may not. The concepts of the
structural and the bi-lateral IDP developed here should be viewed as complementary to the
macro IDP view.
20
6. References
Bellak, C. (1996). "Foreign Direct Investment From Small States and Integration - Micro- and
Macroeconomic Evidence From Austria", in: Hirsch, S., T. Almor (eds) Outsider's Response
to the Unification of the European Community, Munksgaard Int. Publishers Ltd., pp. 57-98.
Bellak, C. (1997). ” Austrian Manufacturing MNEs: Long Term Perspectives, Journal of
Business History, Vol. 39, No. 1, pp. 47-71.
Bellak, C. (1998). "The Measurement of Foreign Direct Investment - A Critical Review", The
International Trade Journal, Vol. XII, No. 2, pp. 227-257.
Bellak, C. (2000). "Austria - catching-up through inward FDI?" in: Gabor Hunya (ed.)
Integration through foreign direct investment, Edward Elgar: Cheltenham, pp. 81-110.
Buckley, P.J. and F.B. Castro (1998). "The Investment Development Path: The case of
Portugal", Transnational Corporations, Vol. 7, No. 1, pp. 1-15.
Buckley, P.J. and F.B. Castro (1999). Outward FDI in Manufacturing from Portugal:
Internationalisaton strategies from a new foreign investor, Paper presented at EIBA 1999,
Manchester.
Dunning, J.H. (1980). "Toward an Eclectic Theory of International Production: Some
Empirical Tests", Journal of International Business Studies, Spring/Summer, pp. 317-335.
Dunning, J.H. (1981). "Explaining the International Direct Investment Position of Countries:
Towards a Dynamic or Developmental Approach", Weltwirtschaftliches Archiv, Vol. 117, No.
1, pp. 30-64.
Dunning, J.H. (1982). "Explaining the International Direct Investment Position of Countries:
Towards a Dynamic or Developmental Approach", in: Black, J. and Dunning, J.H. (eds)
International Capital Movements, Basingstoke: Macmillan.
Dunning, J.H. (1986). "The investment development cycle revisited", Weltwirtschaftliches
Archiv, Vol. 122, No. 4, pp. 30-64.
21
Dunning, J.H. (1999). The Eclectic Paradigm As An Envelope For Economic And Business
Theories of MNE Activity. Discussion Papers in International Investment and Management,
263, University of Reading.
Dunning, J.H. and Narula, R. (1994). "Transpacific Foreign Direct Investment and the
Investment Development Path: The Record Assessed", Essays in International Business, No.
10, May (South Carolina).
Dunning, J.H. and Narula, R. (1996). Foreign Direct Investment and Governments,
Routledge: London and New York.
Egger, P. (2000). Economic Integration in Trade and Foreign Direct Investment: Dynamic
Considerations of Potentials and Adjustment, Journal of International Relations and
Development, Vol. 3, No. 2, Special Issue on Foreign Direct Investment and Trade (J.
Cantwell and C. Bellak, Guest Ed.), pp. 173-183.
Guger, A. (2000). Verbesserung der relativen Lohnstückkostenposition durch EUROKursrückgang, WIFO Monatsberichte, No. 9, pp. 541-545.
Gundlach,
E.,
Scheide,
J.
and
Sinn,
S.
(1990).
"Die
Entwicklung
nationaler
Auslandsvermögenspositionen: Konsequenzen für die Wirtschaftspolitik", Kieler Studien, No.
230, Institute of World Economics: Tübingen.
Hutschenreiter, G. and S. Kaniovsky (1999). "Technologieströme in der österreichischen
Wirtschaft", WIFO Monatsberichte, Vol. No. 6, pp. 419-433.
Koman, R. and D. Marin (1997). "Human capital and macroeconomic growth: Austria and
Germany 1960-92", London: CEPR Discussion Papers, No. 1551.
Landesmann, M. and I. Székely (1995). Industrial restructuring and trade reorientation in
Eastern Europe, Cambridge: Cambridge University Press.
Lane, P. (1999). "International Investment Positions: A Cross-Sectional Analysis", Trinity
Economic Paper Series, Technical Paper No. 99/5.
22
Maddison, A. (1995). Explaining the Economic Performance of Nations: Essays in Time and
Space, Edward Elgar.
Marin, D. (1988). "Import-led Innovation: The Case of the Austrian Textile Industry",
Weltwirtschaftliches Archiv, Vol. 124, No. 3, pp. 550-565.
Narula, R. (1996). Multinational Investment and Economic Structure, Routledge.
Narula, R. and J.H. Dunning (2000). "Industrial Development, Globalization and Multinational
Enterprises: New Realities for Developing Countries", Oxford Development Studies, Vol. 28,
No. 2, pp. 141-167.
OECD (1995). Local Responses to Industrial Restructuring in Austria, Paris: OECD.
Ozawa, T. (1996). Japan: The macro-IDP, meso-IDPs and the technology development path
(TDP), in: Dunning, J.H. and Narula, R. (Eds.), pp. 142-173.
Pichl, C. (1989). "Internationale Investitionen, Entwicklungsniveau und Landesgröße", WIFO
Monatsberichte, No. 4, pp. 259-266.
Scheide, J. (1993). "Does economic growth depend on external capital? Some Evidence from
116 countries", Applied Economics, 25, pp. 369-377.
Sinn, S. (1990). "Net External Asset Positions of 145 Countries: Estimation and
Interpretation", Kieler Studien, No. 234, Institute of World Economics: Tübingen.
Tolentino, P.E.E. (1993). Technological Innovation and Third World Multinationals, London:
Routledge.
7. Appendix: Figures
23
Table 1. Determinants of the NOIP in stages 4 and 5 from the viewpoint of a developed country
Determinants
General
Authors
(1) Stage of National
GDP p.c.
Tolentino 1993,
Development
Buckley and
Castro 1998 etc.
(2) Process of domestic
industrial
development
(3) Alternatives to FDI
and Trade openness
(4) Trade Costs
Structural change and similarity measures
i
[Ó(shk
shkj)
Export ratio
S=
*
(shki
/ 100)]
1/2
+)
Landesmann and
Szèkely 1995
Lane 1999
Difference between cost insurance freight (cif) and free on
board (fob) values from bilateral trade statistics
(5) Ownership structure Share of foreign TNCs: Domestic employees in foreign-owned
subsidiaries over total domestic employees
(6) ”large neighbor
Dummy for share of Germany, since share of inward FDI from
factor”
Germany and outward FDI to Germany is particularly large)
(7) Competition
CR4
intensity
Ownership Advantages
Egger 2000
(1) Degree of foreign
[(S DO F / S T F+D) / (S DO D / S T F)] #)
penetration
(2) Technological Level Stocks of R&D or (R&D expenditure / Output)
Outward FDI stocks as percentage of GDCF
Sleuwaegen,
Veugelers 1999
Narula 1996,
Dunning 1982
Pichl 1989
Share of foreign production in total value-added
Hirsch 1998
Share of non-manual labour in total employment
Average turnover of firms in an industry
Dunning 1980
Dunning 1980
(3) Relative outward
FDI
(4) Competitive
advantage
(5) Skill-intensity
(6) Size of firms and
scale economies
(7) Relative Productivity
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(1)
(2)
(1)
(1)
(2)
(3)
Labour productivity (Austria vs. host countries and vs.
Germany) and productivity growth
Location Advantages
Relative inward FDI Inward FDI stocks as percentage of GDCF
Physical resources
Physical capital
Created resources,
Percentage of professional, technical, administrative and
Stock of human
managerial workforce to total workforce
capital
Natural resources
Primary and tertiary sector's exports (absolute and as
percentage of GDP)
Infrastructure
Ranking
Labor costs
Relative wages (RULC)
Tax rate
Corporate income tax rate (Dummy variable: lowering to
38%)
Market-size
Relative market-size by GDP
Ownership and Location Advantages
O- and L-advantages Revealed comparative advantage
combined
O / L-advantages
Ownership relative to location advantages [e.g. O(3) / L (1)]
Internalization Advantages
Internal Resource
Royalties etc. and other fees received by domestic enterprises
Transfer
from foreign unaffiliated firms as percentage of fees received
by domestic firms from foreign affiliated and unaffiliated
firms.
Policy-related Factors
Technology policy
R&D-subsidies as percentage of total R&D or share of
government financed R&D over private sector R&D
Stability
Standard Deviation of Inflation rate etc.
Regional Economic Dummy for year of FTA with EU or Opening of Eastern
Integration
Europe
-
Dunning 1980
Pichl 1989
Dunning 1982,
Narula 1996
Dunning 1982
WEF, IMD
Lane 1999
Hirsch, Czerniawsky 1998
Dunning 1982
Dunning 1982
Lall 1996
Dunning 1982
Note, that stages 1 -3 are excluded since they are not relevant here.
+) shki , shkj ... employment or value-added shares (in percentages) in industry k in year i and j when the extent of structural change in a country
over a given period is investigated (= structural IDP); macro-level: k ... manufacturing sector) or shares of industry k in countries i and j when the
structures of two countries are compared at a given point in time. Year i provides the weights in the first case, and country i in the second; i is the
most recent year.
#) DO ... domestic, FO ... foreign; D ... domestic firms, F ... foreign firms; T ... total (DO + FO) Formula gives the ratio of domestic sales of
foreign-owned subsidiaries to total sales over ratio of domestic sales of domestic TNCs over sales by foreign TNCs in a country (only 30 largest).
24
Table 2. Sectoral structure and weight of foreign employment of Manufacturing Sector (in 1.000)
A
B
C
D
E
F
G
NACE Code
Employment Employment in Employment in
Degree of
Sectoral
Degree of
Sectoral
Domestic
ForeignAustrianInternationaliz structure of Internationa- structure of
controlled
controlled
ation of sectors
foreignlization of
employment
Subsidiaries in Subsidiaries
in Austria
controlled
Austrian secabroad
Austria
abroad
D=(B/A)*100 employment
tors abroad
in Austria
F=(C/A)*100
15-16
61,20
8,10
7,60
13,24
7,37
12,42
8,65
17-19
38,10
7,70
9,00
20,21
7,01
23,62
10,24
20
33,00
1,70
4,00
5,15
1,55
12,12
4,55
21-22
38,30
4,90
6,60
12,79
4,46
17,23
7,51
23-25
50,20
16,80
13,50
33,47
15,29
26,89
15,36
26
32,00
3,50
9,30
10,94
3,18
29,06
10,58
27-28
83,60
8,20
9,00
9,81
7,46
10,77
10,24
29
64,00
17,20
7,30
26,88
15,65
11,41
8,30
30-33
68,10
28,80
13,60
42,29
26,21
19,97
15,47
34-35
28,40
10,80
3,90
38,03
9,83
13,73
4,44
36-37
41,60
2,40
4,20
5,77
2,18
10,10
4,78
TOTAL
538,30
109,90
87,90
20,42
100,00
16,33
100,00
Source: own calculations based on data of Austrian National Bank
NACE Code:
15-16 ... Food products
17-19 ... Textile products, apparel and leather
20 ... Wood and wood products
21-22 ... Paper publishing and printing
23-25 ... Refined petroleum products, chemicals, rubber and plastic products
26 ...nonmetallic mineral products
27-28 ... Metal products
29 ... Mechanical products
30-33 ... Electrical and optical equipment
34-35 ... Transport equipment
36-37 ... Manufacturing n.e.c.
25
Table 3: NOIP according to bilateral and structural characteristics of country A vis-à-vis country B (industry a vis-á-vis competitors in indutries b, respectively)
NOIP
Proposition 1 *)
Example 1
Proposition 2
Example 2
Bilateral
Structural
Static View
Level of development is higher in country Share of growth sectors is larger than
A than in country B.
share of mature sectors in country A.
GDP p.c. in Austria is higher than in Austrian machine-tool industry replaces
Germany.
exporting by FDI, due to high labor costs
and to increased service intensity
(software),
as
industry
upgrading
proceeds.
Level of development is higher in country Share of mature sectors is larger than
B than in country A.
share of growth sectors in country A.
GDP p.c. in Germany is higher than in Austrian wood industry loses against East
Austria.
European competitors. Some firms are
overtaken, some go bankrupt.
Dynamic View
Catching up and convergence of country Share of growing sectors rises relative to
A to country B.
mature sectors.
Example 3
Productivity gap of country A vis-à-vis Pulp & Paper industry of Austria develops
country B is closed.
a new process technology.
Proposition 4
Divergence of country A to country B.
Share of mature sectors rises relative to
share of growth sectors.
Example 4
Recession due to overheating of the Declining O-advantages, relative to
economy.
competitor firms, combined with a
downturn of business cycle reduces the
incentive to innovate.
*) Note: There are other combinations of bilateral and structural IDPs, which are, however, logically inconsistent.
Proposition 3
26
Macro
Positive net-FDI-flows of country A
Market seeking inward FDI, strong Oadvantages of Austrian firms stimulates
production abroad.
Negative net-FDI-flows of country A
Some market seeking outward FDI, few
O-advantages of Austrian firms, some
inward FDI, where Austrian firms are
weak.
Improvement of net-FDI-stocks of country
A
Austrian firms set up new affiliates abroad
and strengthens existing ones.
Deterioration of net-FDI-stocks of country
A
Foreign Pulp & Papter companies acquire
Austrian firms (cheap asset prices) and
reduce overcapacities in the markets
during the recession.
Appendix Table A1: Classification Changes
Year
1972
1st structural
break 1989
2nd structural
break 1995
1998
1998
Change of ...
Start of regular bi-annual publication of book-values of inward and
outward FDI. Industry classification follows ”Branchengliederung der
Sektion Wirtschaftskammer Österreich”.
From 1989 onwards, the threshold of capital share was increased to
ATS 1 mn and the minimum stake was defined as 10%. (This implied a
loss of smaller firms, which accounted for only a very small amount of
total FDI.)
From 1995 onwards, also firms with a capital share below ATS 1 mn
are generally excluded, yet those with a balance-sheet value that
exceeds ATS 100 mn are included.
From 1995 onwards, industry classification follows ÖNACE (Austrian
NACE). Published data are partly groups of ÖNACE 2-digit values.
Therefore, they cannot be compared to earlier data.
Inward FDI: capital share was increased to ATS 5 mn.
Outward FDI: capital share was increased to ATS 10 mn.
5th Ed. Of IMF ”Balance of payments Manual” introduced. (Affects
primarily FDI flow data, inter alia reinvested earnings.)
27
Figures
Figure 1. Inw ard and outw ard FDI stocks' share in GDP among the smaller
countries in Europe (and EU average)
Figure 3: The Idealized NOIP
Finland
Inw ard Stocks / GDP (1997)
Austria
Outw ard Stocks / GDP (1997)
60
Norw ay
40
Denmark
20
NOIP
EU
Sw eden
Sw itzerland
0
-20
Ireland
-40
Netherlands
-60
Belg./Luxembrg.
0
10
20
30
40
50
60
Source: Narula 1996, p. 22
70
Level of Development
Percentage of GDP
Figure 4: NOIP on macro level
Figure 2: Outw ard and Inw ard FDI Flows and NOIP (in percent of GDP)
1961-1999
500
Outw ard FDI
2,5
Inw ard FDI
NOIP
2
Inward FDI
Outward FDI
NOI-Flow
FDI, NOIP (ATS bn)
ODI, IDI, NOIP (% of GDP)
400
1,5
1
0,5
0
-0,5
300
200
100
0
150
-100
160
170
180
190
200
210
-1
-1,5
-200
Year
GDP p.c. in ATS 1000 in prices 1983
28
220
230
Figure 7: Chemical NOIP p.c.
Figure 5: Austrian NOIP p.c.
real GDP p.c.
real GDP p.c.
0
0
154,80
155,50
16 0 , 8 0
16 6 , 7 0
175,40
18 7 , 0 0
19 1,70
19 5 , 3 0
206,50
2 17,40
154,80
228,50
155,50
160,80
166,70
175,40
187,00
191,70
195,30
206,50
-0,000002
-0,0005
-0,000004
NOIP p.c.
NOIP p.c.
-0,000006
-0,000008
-0,00001
-0,001
-0,0015
- 0 , 0 0 0 0 12
-0,002
- 0 , 0 0 0 0 14
- 0 , 0 0 0 0 16
-0,0025
- 0 , 0 0 0 0 18
Figure 8: Electrical NOIP p.c.
Figure 6: Structural NOIP of manufacturing sector
real GDP p.c.
Outw ard
Inw ard
0,0002
NOIP
100
0
154,80
60
-0,0002
40
20
0
150
-20
160
170
180
190
200
210
NOIP p.c.
FDI, NOIP (ATS bn)
80
220
-40
-0,0004
-0,0006
-0,0008
-60
GDP p.c. in ATS 1000 in prices 1983
-0,001
- 0 , 0 0 12
29
155,50
160,80
166,70
175,40
187,00
191,70
195,30
206,50
Figure 9: Chemical plus Electrical NOIP p.c.
real GDP p.c.
Figure 11: Bilateral NOIP betw een Austria and Germany
0
154,80
155,50
160,80
166,70
175,40
187,00
191,70
195,30
206,50
50
40
FDI, NOIP (ATS bn)
-0,0005
NOIP p.c.
-0,001
- 0 , 0 0 15
30
Austrian Outw ard FDI stocks in Germany
German Inw ard FDI stocks in Austria
NOIP
20
10
0
-10150
160
170
180
190
200
210
220
-20
-30
-0,002
-40
GDP p.c. in ATS 1000 in prices 1983
-0,0025
Figure 10: Structural NOIP of pulp and paper industry
2,50
12
FDI p.c., NOIP p.c. (ATS mn)
FDI, NOIP (bn ATS)
10
8
6
4
2
0
-2150
200
-4
-6
Outw ard FDI
Inw ard FDI
NOIP
2,00
1,50
GDP p.c. in ATS 1000 in prices 1983
Austrian Outw ard FDI stocks
p.c. in Germany
German FDI stocks p.c.in
Austria
NOIP
1,00
0,50
0,00
150
-8
Figure 12: Bilateral NOIP p.c. betw een Austria and Germany
w ith normalized FDI stocks
160
170
180
190
200
GDP p.c. in ATS 1000 in prices 1983
30
210
220
Figure 15: Bilateral NOIP p.c. betw een Austria and the US
w ith normalized FDI stocks
Figure 13: German NOIP p.c.
0,90
FDI p.c., NOIP p.c. (ATS mn)
real GDP p.c.
0
154,80
155,50
160,80
166,70
175,40
187,00
191,70
195,30
206,50
-0,0000005
-0,000001
NOIP p.c.
- 0 , 0 0 0 0 0 15
-0,000002
Austrian Outw ard FDI
stocks p.c. in US
0,80
0,70
0,60
US FDI stocks p.c.in
Austria
0,50
NOIP
0,40
0,30
0,20
0,10
0,00
150
-0,0000025
160
170
-0,000003
180
190
200
210
220
GDP p.c. in ATS 1000 in prices 1983
-0,0000035
-0,000004
Fig. 16: Equilibrium of NOIP
Figure 14: Bilateral NOIP Position betw een Austria and the US
150
0,00
NOIP as fraction of inward FDI
8
FDI, NOIP (ATS bn)
6
4
2
0
150
-2
160
170
180
190
200
210
220
-4
Outw ard FDI
Inw ard FDI
NOIP
-0,10
-0,20
-0,30
-0,40
-0,50
-0,60
-0,70
-0,80
-0,90
-6
GDP p.c. in ATS 1000 in prices 1983
31
160
170
180
190
200
GDP p.c. in ATS 1000 in prices 1983
210
220