AIT & wiiw Study: Austria's Exporting Companies Lead Economically and Technologically

More than two-thirds of domestic GDP (taking into account imported intermediate goods) is generated abroad. But what about the export-oriented enterprises in the country? How important are they for productivity, innovation, employment and value creation? These questions were examined in a new study by the Vienna Institute for International Economic Studies (wiiw) in cooperation with the Austrian Institute of Technology (AIT).

The conclusion: "Companies that export are significantly larger, more innovative, more productive and also more profitable, pay higher wages, invest more and also do more to protect the environment," says Robert Stehrer, scientific director of wiiw and co-author of the study. Together with Bernhard Dachs from the AIT Center for Innovation Systems & Policy, Stehrer analysed 5,000 companies from the manufacturing sector. Two thirds of them (3,500) also export their products abroad.

Large-scale industry is the export champion

The largest of them are responsible for the lion's share of exports. In 2019, the largest 5% of companies in the country accounted for 65% of exports by value. The largest quarter of domestic firms even accounted for 90% of all exports. Similarly, the importance of exports for business activity increases with firm size. While firms with up to 49 employees generate on average less than 20% of their turnover abroad, firms with over 1,500 employees are almost exclusively exporters (97% share of turnover). "Export world champions are thus primarily the large leading companies in industry," says the study's co-author Bernhard Dachs from the AIT.

Export-oriented companies also have a significantly higher labour productivity. For them, it is higher by a factor of 1.2 to 1.6 per hour worked than for firms that do not export. Although exporters account for two-thirds of domestic companies, they provide no less than 90% of employment, turnover, investment and spending on environmental protection. "The flip side of this, however, is also a high economic vulnerability to supply chain problems, as the Ukraine war - for example in the car industry - is currently showing us again," Stehrer argues.

Research and development as key

Companies that are active in exports also invest much more money in research and development as well as digitalisation. This is particularly evident in the high-tech sector. The high-tech sector has the highest share of firms R&D activities, at around 80%, and also the largest export share of turnover, at 70%. In this context, the one determines the other. "Lucrative export opportunities create incentives to develop innovative products. However, research and development are the basic prerequisite for being internationally competitive," explains Bernhard Dachs, economist at the AIT.

Policymakers should therefore do everything they can to strengthen research and development, productivity and the export opportunities of companies, according to the authors. In their view, more innovation plays the key role here. "Increased efforts in research and development and a science and education policy that creates an environment in which research can flourish would be essential," says Dachs. This is the only way to inspire more people to take up relevant professions and thus alleviate the acute shortage of skilled workers, especially in the natural sciences.

The study is available for download here. It was commissioned and financed by the Federal Ministry of Labour and Economy (BMAW), formerly the Federal Ministry for Digitalisation and Economic Affairs (BMDW).