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01.10.2008

Current location analysis by Bank Austria Group Economics: Vorarlberg among the top thirty regions in Europe

  • “Textile province” blossoms into modern, broadly positioned economic location
  • Export champion thanks to successful structural change
  • Practical innovative abilities and flexibility as the basis for long-term growth

The economy in Vorarlberg has experienced significant structural change over the past few years. The “textile province” has gone from a virtual “monoindustry” to a highly competitive service economy with a strong industrial core. This is the conclusion of a new location analysis by Bank Austria Group Economics, which was presented by Helmut Bernkopf, a member of Bank Austria's Managing Board; Stefan Bruckbauer, Bank Austria’s deputy chief economist; and Hans Winter, Bank Austria’s provincial manager. Since EU accession, the economy in Vorarlberg has grown by nearly 3 per cent annually, putting it in second place. Its continuing focus on the industrial sector makes Vorarlberg’s economy particularly dependent on the global economy and will lead to a below-average level of development in 2008 as a result of unfavourable international conditions.

With regard to the four analysis groups, Vorarlberg scores particularly well with its high standard of living: At roughly EUR 34,600, the regional per capita GDP is significantly higher than the Austrian average. This puts Vorarlberg among the top thirty regions in Europe, and, excluding capitals, it is actually among the top ten. Among the regions in the immediate vicinity, only the Principality of Liechtenstein is better off; even Switzerland’s cantons rank lower than Vorarlberg. Vorarlberg would be the fourth richest region in Germany at the moment, behind Hamburg, Upper Bavaria and Darmstadt.

Structural transformation brings record employment and export levels
In the second analysis group, labour market data, Vorarlberg also shines with top values. The number of employed persons has risen by 1.2 per cent annually over the last decade, and, with roughly 145,000 employees, employment levels have reached a historical high. The province has the second highest employment rate in Austria. The unemployment rate has also decreased substantially and, at 5.7 per cent, is significantly below the Austrian average, which amounted to 6.2 per cent.

“Its successful structural change and geographic location have made Vorarlberg into Austria’s export champion,” says Helmut Bernkopf, a member of Bank Austria’s Managing Board. “At the moment, roughly 65 per cent of products are exported, amounting to an impressive EUR 20,500 in per capita exports.” Since 2000, Vorarlberg has enjoyed double-digit annual export growth. Supported by the strength of the industrial sector, export development over the last four years was particularly dynamic.

“Overall, Vorarlberg took third place in Austria, almost tied with Upper Austria and Salzburg. The companies in Vorarlberg are doing very well and are showing tremendous strength in many areas,” says Bernkopf.

Momentum in higher-quality industrial segments and sustainable service sectors
The structure of Vorarlberg’s economy is well-equipped for future economic challenges. “At 27.4 per cent, Vorarlberg has the second highest share of material goods in its regional economic performance, following Upper Austria. A growing variety of sectors and technological upgrades have helped Vorarlberg to achieve more sustainable structures,” says Stefan Bruckbauer, Bank Austria’s deputy chief economist, in his analysis of the situation. “With their successful reorientation from the textile industry to future-oriented services and higher-quality industrial segments, companies in Vorarlberg have demonstrated their high level of adaptability in a quickly changing, globally connected economic environment.”

The ratio of people employed in corporate services, such as lawyers, tax consultants and advertising representatives, has steadily risen to its current level of 6 per cent. Although there is still room for improvement in comparison to the rest of Austria, the gap has significantly diminished in recent years. The ratio of people employed in the growth and technology sectors, such as the electronics industry, machine building, automotives and the chemical industry, has increased to over 7 per cent.
The qualitative improvement in Vorarlberg’s economy can also be seen in the fact that employment in low-technology sectors, such as the textile and apparel industries, has decreased significantly more than the Austrian average. In contrast, segments requiring higher-quality technology and innovation, such as medicine, IT and metrology, have enjoyed particularly intense growth.

From beneficiary of innovation to trendsetter with more research and stronger networks
“The success of the repositioning to technologically higher-value economic sectors and in the export sector can essentially be attributed to the increasing innovative abilities of Vorarlberg’s economy. The companies’ research expenditures are marginally lower than the Austrian average, but at the same time Vorarlberg has demonstrated a high level of research efficiency,” explains Bank Austria’s provincial manager Hans Winter.

As a result of practical collaboration between research institutions and leading companies and despite below-average financial resources, Vorarlberg is at the forefront in Austria, for example, in the registration of patents.

Encumbered by the lack of a university sector in the province, the R&D ratio is below the national average, at around 1.3% of GDP. The EU’s Regional Innovation Scoreboard ranks Vorarlberg as fifth in Austria in comparison with the other provinces. The variables in this indicator include educational activities, employment structures and specific innovative abilities.

Population development and long-term growth opportunities
In summary, the economists at Bank Austria affirm that with its future orientation, Vorarlberg has extremely good chances of enjoying success both nationally and on the European level. The current population forecast, which predicts a significant increase in the labour pool, highlights the province’s excellent long-term economic development opportunities.

“Location Vorarlberg” brochure: Economic handbook and guide for development programmes
Together with the provincial government of Vorarlberg, Bank Austria's Economics department has prepared a detailed brochure which puts Vorarlberg's attractiveness as a location, competitiveness and growth potential to the test. The second section of the "Location Vorarlberg" brochure gives an overview of grants and development, including national development programmes and joint financing by the EU. As a member of UniCredit Group, Bank Austria has access to a global network with a particularly strong focus on Germany, Italy and Central and Eastern Europe. This guide from Bank Austria is intended to help companies to be well-equipped for impending economic challenges, irrespective of whether they are at the start-up, consolidation or expansion stage.

The "Location Vorarlberg" brochure is part of a new series of analyses of the federal provinces. It is available at the RegionalCenter for corporate customers in Vorarlberg (+43 (0)5 05 05 ext. 98344) and can be downloaded at www.bankaustria.at.


Enquiries: Bank Austria Press Office Austria
Martin Halama, Tel. +43 (0)5 05 05 ext. 52371;
E-mail: martin.halama@unicreditgroup.at

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