Several empirical studies have broadly agreed that the "opening" of eastern Europe has been of considerable advantage for the Austrian economy. One of the reasons for this positive conclusion was that following the events of 1989, Austrian firms have seized the opportunities offered by the eastern markets more quickly and better than their competitors from other western countries. However, this "embrace" of the East appears to have peaked as early as 1991-92. Austrian merchandise exports lost market shares in 1992 and, to a greater extent, in subsequent years. Also for Austrian direct investment in East-Central Europe, a falling trend is clearly discernible. In 1990, Austrian firms accounted for more than two-fifths of all foreign direct investment in the region, in the following year for still respectable 17.5 percent. In 1992, the Austrian market share was squeezed to 11.3 percent and it declined further in the following years. Austrian investment took a major setback in 1995 when its market share was only 5.6 percent. On a Schilling basis, Austrian direct investment in the East stagnated at a level of ATS 5½ billion between 1991 and 1995, corresponding to a slight increase in dollar terms (from US$ 0.42 to 0.56 billion) while total foreign direct investment in the East increased tenfold over the same period (from US$ 1.3 to 13.1 billion). Austria's initial success in exports and foreign direct investment in neighboring eastern Europe may be ascribed to the very factors often cited as giving Austria a "special role" between East and West: historical and traditional relations, geographical and mental proximity, high flexibility of the (predominantly small and medium-sized) Austrian enterprises, publicity of Austrian products. Most important, however, was probably the information advantage of Austrian over other potential foreign investors, which allowed them to better weigh the risks (which at the time were difficult to assess) of an "investment adventure" in the East, thereby obtaining lower risk premia. This assumption is confirmed not only by the fact that Austria almost immediately acquired a market share of 40 percent, but also by its continued top position in the "less secure" markets. The impressive initial performance of Austrian investors was also made possible by policy which offered an array of schemes to cover the risks for investors in eastern Europe. With stabilization in the region progressing and information barriers easier to overcome, more and more western countries have come to realize the potential of eastern Europe as investment location. While Austria's initial privileged position was thus virtually unsustainable, the extent of recent market share losses would appear unnecessarily large.