Vienna as a Financial Center
As the Single European Financial Market emerges, the international competitiveness of the supply of financial services becomes ever more important. Competitiveness hinges, among others, on the attractiveness of a specific location as a financial center. This has far-reaching consequences for the economic development potential of a given region. By international standards, Vienna is only a minor financial center. For this reason, only limited possibilities exist to create favorable supply conditions. Nevertheless, if Vienna wants to remain sufficiently competitive as a financial center within the newly emerging European landscape, it will be forced to adapt its structures to the rapidly changing conditions of international financial markets. Increased competition within the Single European Financial Market makes it very difficult for a minor financial center to assume a lead position within the hierarchy of international financial centers. Vienna will be able to play a more prominent international role only in selected market segments. A combination of viable specialization characteristics and a more attractive product mix will have to be developed to form a basis for comparative advantage vis-à-vis other competitors. The opening up of Eastern Europe offers a unique opportunity to this end. However, this opportunity must yet be exploited efficiently and turned into a competitive advantage. Vienna will be able to assume importance beyond its regionally defined role only if it manages to become attractive for a strategically defined product and customer range beyond Vienna and Austria. These make use of existing locational advantages in their development. If the access to Eastern European markets is interpreted as an extension of its home market base, Vienna will find opportunities for a process of specialized internationalization. Such a development is supported by the positive macroeconomic performance of Austria which is enhanced by international recognition of Austria's foreign exchange policy (the pegging of the Schilling to the Deutschmark), by the by-now complete liberalization of international financial flows as well as by very favorable tax conditions. The functioning of the financial markets proper still needs to be improved with respect to market as well as supply structures, especially in those segments which are only little developed, e.g., stock markets and equity financing. The market participants today already judge the attractiveness of Vienna as a financial center as being superior to that of 1985. Macroeconomic performance, quality of life, and geographic location appear as specific comparative advantages in the eyes of the participants. These factors need to be popularized more directly in order to improve the image of Vienna as a financial center. Still, one should not make forget that the pivotal factor for a more competitive financial center Vienna lies in an improvement of Austria's financial markets' structures. Only if the existing weaknesses are eliminated on the basis of a strategic concept, will Vienna be able to position itself in the long run as a selectively internationalized financial center of the future.