Competitiveness under New Conditions

All Photos and Presentations of the WIFO Economic Talks 2024
Following the General Assembly of the Austrian Institute of Economic Research, the WIFO Economic Talks with Gabriel Felbermayr, Elisabeth Christen, Renate Anderl and Harald Mahrer took place on 4 June 2024. Agnes Kügler was the moderator of the event.

"Austria's economy has been in a mess since 2010. We are growing much more slowly than the rest of Europe, which is already not very dynamic, we have a higher inflation rate and international competitiveness can only be maintained with an ever weaker euro," said WIFO Director Gabriel Felbermayr in his keynote statement.

"The demographic dividend has been falling since 2010 and globalisation, which is so advantageous for Austria overall, is also increasingly moving backwards. These are structural problems to which the next federal government urgently needs to find powerful answers."

"International trade is increasingly being instrumentalised for political purposes, in which economic dependencies are used to achieve power political goals," says WIFO economist Elisabeth Christen. The EU has responded to these geo-economic upheavals by realigning its trade policy strategy towards an open, sustainable and resolute approach and pushing for the expansion of unilateral, autonomous instruments in order to protect the internal market from unfair trade practices or coercive measures, increase the EU's ability to act when enforcing trade rules, create a level playing field and ensure sustainable supply chains and the protection of human rights.

As the results of a WIFO study show, the welfare effects of the new instruments are moderate, although some create significant trade diversion effects that lead to an uneven distribution of costs across EU member countries and economic sectors. "This requires careful consideration of the use of trade policy instruments and alternatives in order to avoid conflicting objectives and the risk of protectionism and escalation spirals in trade conflicts. The EU internal market, with its size, depth and dynamics, is a defensive and offensive means of exerting pressure when dealing with third countries and plays a key role in the effectiveness of the new trade policy instruments," said Christen.

Download the presentation by Elisabeth Christen

In the subsequent discussion with Harald Mahrer, President of the Austrian Federal Economic Chamber and WIFO, and Renate Anderl, President of the Chamber of Labour and Vice President of WIFO, the topic of competitiveness under new conditions was examined. WIFO economist Agnes Kügler chaired the discussion.

"Austria is facing a brutal rendezvous with reality that will be much bigger than many realise. The global competition for innovation continues to increase and we must act now. Increased funding for basic research is the key to playing at the top of the innovation leaders. By increasing the research quota, we can massively increase our competitiveness and at the same time create internationally attractive framework conditions," said Mahrer.

"Well-trained specialists and workers are key levers for competitiveness. Companies must once again invest more in their employees and provide them with training and further education. It is unacceptable that some companies gain a competitive advantage through unfair practices – this must be tackled," says Anderl.