Austria's Competitiveness and its Determinants

Project Lead: Klaus Weyerstrass
Team: Jan Kluge, Sarah Lappöhn, Alexander Schnabl, Martin Wagner
Duration: January 2018 – December 2020
Funding: OeNB - Jubiläumsfonds Project No. 17686

Austria ranks 18th (out of 137) in the most recent Global Competitiveness Report. But despite of this respectable position, this observation gives rise to important research questions concerning the multifaceted or multidimensional concept of competitiveness of the Austrian economy. We investigate these issues by zooming in on several key aspects with a corresponding mix of methods. First, we analyze and decompose total factor and labor productivity using panel econometric methods, i.e. we consider the main factor shifting the production possibility frontier. Second, we perform stochastic frontier analysis (SFA) to assess the distance of the Austrian economy, respectively its sectors, to the international productivity frontier; with a particular focus on identifying the determinants of inefficiencies. Third, data envelopment analysis (DEA) will be used to assess (in-)efficiencies also in broader terms in a multi-output setting that allows to include, e.g., also aspects like environmental quality, for a broader perspective. All analyses are performed for the EU member states – both with aggregate as well as sectorally and regionally disaggregated data – with a particular focus on the main trading partners and neighbors of Austria. The set of findings from these approaches allows to draw comprehensive conclusions concerning the determinants of productivity growth and (in-)efficiencies and thus identify options to increase competitiveness.