Economic Impact of Innovation

The index below is a summary index of the economic impact of innovation composed of five of the Innovation Union Scoreboard's indicators:

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Overall, Austria's employment is slightly more oriented towards knowledge-intensive sectors than the EU average. Austria's scores on the indicators "PCT patents application per billion GDP" and "Contribution of medium and high-tech products exports to trade balance" is also above EU average, reflecting the very good innovation performance of its manufacturing sector. Austria's low score on the summary index is strongly influenced by a very low score on the indicator "Knowledge-intensive services export as % of total services exports", which is explained by the dominance in its services export of the tourist sector, which is classified as non-knowledge-intensive. The recent economic crisis has been less severe on Austria than on other EU Member States with the result that the conditions for innovation have faced fewer challenges in Austria than in most other EU countries, although the availability of business financing has decreased in 2009.

In 2010, according to enterprise surveys7 Austria was among the middle performers in the EU as regards the ease of access to loans and the availability of venture capital. Austria currently also ranks in the middle group of EU member states in the World Bank's index Ease of doing business. However, Austria ranks low regarding the time needed to start a business, since the number of administrative procedures required for setting up a business is still relatively high. There are on-going efforts to reduce the administrative burden on enterprises. Expenditure on R&D is high by European standards, but Austria may not be sufficiently exploiting and maintaining its innovative potential.

One reason for this is an underdeveloped venture capital market (venture capital represented 0.04% of GDP in Austria in 2011 compared to an EU average of 0.35%), which suffers from an unfavourable legal framework and from structural and other problems of the Austrian VC market (e.g. small size and limited differentiation, general reluctance to invest in early stages, uncertainty concerning the treatment of non-incorporated companies as VC funds etc). In addition, the education system faces the challenge of providing the skills required as a basis for innovation and competitiveness, but the low tertiary attainment rate and the general demographic development might lead to a scarcity of skilled people in the long term.