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Tips for investors: differences and similarities between Austria and Germany


 

 Some investors may consider Austria and Germany as something united: common ethnic origin, common language, close cultural and historical ties etc.
 
In German “Austria” means “Eastern lands”. Strange as it may seem but sometimes close ties and relations may cause rivalry and conflicts. Indeed, Austria and Germany can be considered brothers or sisters. Genetics says that brothers or sisters can share only 50% of the same genes. So what should investors know about the differences and similarities between the two neighboring countries?
 

 

 

 

Austria and Germany
Masterforex-V Academy experts say that there are plenty of differences between Austria and Germany. These are the major ones:
The origin: God Forbid you should call an Austrian a German. That would be treated as an insult. A lot of Austrians are of Slavic, Hungarian and Jewish origin.
The language: The standard German language in Austria is the language of mass media, business, politics and education. However, common people speak some kind of a dialect.
Austria’s external policy: Austria is small country, which is not as relevant in the international arena as Germany. It is the only continental EU country which is a non-NATO member. Its external policy is based on nonalignment. It is strictly forbidden to locate international military bases on its territory. On the contrary, Germany is a political heavyweight and a NATO member. Its military units are located around the world.
Living standards: in Austria they are a little bit higher than in Germany. For example, in 2010 in terms of GDP per capita Germany was 31st ($35 900), while Austria was 20th ($40 300). For comparison sake, in 1970 Austria’s quality of live was almost twice as low as Germany’s one.
Cuisine: the Austrian cuisine is more diverse (due to the country’s imperial past - the influence of the Hungarian, Czech and Balkan cuisines). Most Germans prefer fast food as they have no time to take substantial and healthy meals.
The list can be continued.
There are some other things that are important about Austria: The country is relatively small, continental and mountainous (about 80%). It has no substantial deposits of minerals. But nevertheless it is the EU’s 4th richest country and one of the world economic, financial and business centers. How did it manage to reach such high standards of living? According to the latest annual Global Prosperity Index (released by British Legatum Institute together with Oxford Analytica and Gallup World Poll Service), Austria occupies the 14th place (Germany comes 15th). 
 
Now let’s proceed to the strong sides of Austria’s economy.



Австрийская симфония жизни

According to the experts of Masterforex-V Academy, Austria has already overcome the economic crisis. Its economy is developing much faster than the economies of most EU countries. The Organization for Economic Co-operation and Development (OECD) expects Austria’s economy to grow by 2.9% in 2011 and by 2.1% in 2011 (Germany’s economy is expected to grow by 3,4% and 2,5% correspondingly). The reasons for such a success: the government’s timely and substantial financial injection (2% of the GDP) and the peculiarities of the country’s social and economic model.
 
These are the major cornerstones of the Austrian economy:
·         Favorable location: Austria is located in the very heart of Europe. It is probably much easier to name the European countries Austria doesn’t share borders with than to list its neighbors. It means that the country is at the crossroads of major routes between Western, Eastern, Northern and Southern parts of Europe. Obviously Austria can boast its well-developed transportation network (all kinds of transport). Because of Austria’s favorable location it is prestigious, convenient and relatively cheaper to have an office in Vienna. Moreover, Austria is a major regional business center for Central and Eastern Europe: the Vienna Stock Exchange (or Wiener Börse AG) was among the first exchanges to start cooperating with those regions. Over 300 international companies have their offices located in Austria: Ericsson, H&M, Hyundai, Mazda, McDonald's, Nokia, Panasonic, UniCredit Group, Volvo, Western Union etc. Central European Gas Hub (CEGH) is one of Europe’s biggest natural-gas exchanges.
·         Highly-developed industrial sector: Industrial sector makes up 32.3% of the country’s economy, which is a fairly significant share as compared to other developed economies. Firstly, Austria is famous for its machinery construction (for example, mountain lifts produced by Doppelmayr). Austria is Europe’s leader in terms of construction of electric battery and elements and export of skis (Atomic).
·         Highly-productive agriculture: Austria has a small but fairly developed agricultural sector (the share is 1.7%). It is so developed that it can supply the domestic needs by 90%. Moreover, we must confess that Austrian meat and dairy products are exported to numerous countries of the world, which are in great demand abroad. Indeed, Austrian cattle are pastured in the ecological alpine grasslands.
·         Innovation: Austria’s economy can boast its high innovative potential – over 3000 research institutions 35 tech centers, which embrace almost a thousand small and mid-scale innovative businesses. The climate is favorable for Research & Development (R&D), with the government increasing its investments in innovation in the form of numerous subsidies, grants, tax rebates etc. it is not accidental that such tech giants as Sony, Siemens and others trust their Austrian affiliates with various R&D programs.
·         Deep integration into the global economy: Despite its relatively small territory and population (8.4 million), Austria can boast trade relations with 150 countries around the world (It is the world’s 29th country in terms of external trade surplus. Though Germany comes 3rd). It is sufficient to say that Austria’s export makes 60% of the GDP.
·         Tourism: It is common knowledge that tourism (especially in winter) is one of the major sources of the country’s income. Austria is a “mecca” for downhill skiers because the country can boast the world’s best skiing tracks and equipment, as well as high-quality service, not to mention the marvelous landscapes of the Alps. By the way, Vienna has the title of the world’s music capital. 18 million tourists visit Austria every year, thus making 8% of the country’s GNP.
·         Favorable business climate: These are some of the factors that make Austria attractive for investors and businessmen from around the world:
-          Acceptable level of taxation. In 2005 the corporate tax was reduced from 34% down to 25%.
-          Dual citizenship. This is the only EU country, which can grant citizenship to any major investor ( the min level of investment is €2 million)
-          Electronic services. In Austria over 83% of all the official services are rendered by electronic means.
-          Reliable and stable legal system and social security
-          In the “Transparency International” rating it shares the 15th place with Germany.
In other words, it is clear why international investments in the Austrian economy have been growing over the recent years. By the way, in terms of employment Austria is Europe’s 2nd country – only 4,60% unemployed ( in Germany the unemployment is higher - 7,10%).
·         Developed social policy: the key factor of the country’s success is its social model:
-          High remuneration of labor. The min monthly earnings are €1500. Yet there are 13th and 14th salaries (Christmas and vacation). The min hourly earnings are €9,30/h ( in Germany it is €7,60/h).
-          Austria’s education is the etalon for the entire EU. It is free and of high quality. The focus is on technical and social-economic professions. And finally, the educational system is fairly flexible.
-          Free healthcare. Due to high-quality healthcare services and high ecostandards the Austrians’ life-span is one of the highest in Europe (79,65 years).
-          Care about old people. Forbes has called Austria the ideal place for the retired.
 
·         Political, economic and social stability. The basis is social partnership, i.e. the partnership between the government, labor unions and big-scale businesses. They usually have talks on major issues like jobs, earnings, prices etc. That is why Austria is the country with one of the world’s smallest amount of strikes and demonstrations.
 
 
The peculiarities of the Austrian mentality



Двуликий Янус… или особенности национального характера австрийцев

This is the nation which simultaneously looks forward and back (in the future and past). This is a controversial and to some extent paradoxical nation. That is why it is next to impossible to single out some traits of national character peculiar to most Austrians. But let’s try to do it:
The Austrians do not tend to reveal their patriotic feelings. They like to joke and mock at themselves. But at the same time they take care of their country, culture and traditions in all possible aspects. They don’t like it when Austria is confused with Australia. When the ex-President of the U.S. George Bush thanked the Australian Prime Minister for visiting and supporting the “Austrian” troops in Iraq (there is no Austrian troops in Iraq), the Austrians got irritated. In fact, so many people confuse Australia and Austria that tourist shops across Austria sell T-shirts and other souvenirs with the slogan "there are no kangaroos in Austria".
The Austrians are industrious. They have a 40-hour working week – one of the longest in the EU. But they can relax as well – they like to visit restaurants and public places, can communicate for hours. They have a lot of hobbies - from skiing to drawing.
They are cleanly. Austria is one of Europe’s cleanest and well-attended countries. Most Austrians are punctual and pedantic. That is the trait that makes them similar to the Germans. Everything works according to schedules – public institutions, transport, shops, doctor’s offices etc. The Austrians don’t like it when somebody is late.
The people of Austria have a deep feeling of self-respect and dignity. They are lively and cheerful but at the same time they can be gloomy and grumbling about their lives.
They are very saving. Some of them keep a detailed spending record.
And finally, this is a peace-loving and well-mannered nation. They usually don’t reproach others.

 

The peculiarities of the Austrian mentality



Австрийский проводник (узел)

This is the nation which simultaneously looks forward and back (in the future and past). This is a controversial and to some extent paradoxical nation. That is why it is next to impossible to single out some traits of national character peculiar to most Austrians. But let’s try to do it:
The Austrians do not tend to reveal their patriotic feelings. They like to joke and mock at themselves. But at the same time they take care of their country, culture and traditions in all possible aspects. They don’t like it when Austria is confused with Australia. When the ex-President of the U.S. George Bush thanked the Australian Prime Minister for visiting and supporting the “Austrian” troops in Iraq (there is no Austrian troops in Iraq), the Austrians got irritated. In fact, so many people confuse Australia and Austria that tourist shops across Austria sell T-shirts and other souvenirs with the slogan "there are no kangaroos in Austria".
The Austrians are industrious. They have a 40-hour working week – one of the longest in the EU. But they can relax as well – they like to visit restaurants and public places, can communicate for hours. They have a lot of hobbies - from skiing to drawing.
They are cleanly. Austria is one of Europe’s cleanest and well-attended countries. Most Austrians are punctual and pedantic. That is the trait that makes them similar to the Germans. Everything works according to schedules – public institutions, transport, shops, doctor’s offices etc. The Austrians don’t like it when somebody is late.
The people of Austria have a deep feeling of self-respect and dignity. They are lively and cheerful but at the same time they can be gloomy and grumbling about their lives.
They are very saving. Some of them keep a detailed spending record.
And finally, this is a peace-loving and well-mannered nation. They usually don’t reproach others.
 
The weak spots of Austria’s economy:
These are the main problems:
·         Insufficient competitiveness and deregulation of economy. It these terms the German economy looks more promising for new businesses than the Austrian one. It is not accidental that in the global rating of competitiveness Germany comes 5th while Austria comes only 18th.  In general, the German economy is healthier than the Austrian one: in 2010 the former gained 3.30% while the latter gained only 2%.
·         Dependence on imported oil and gas and other energy carriers. The country has almost no mineral deposits, except graphite, wolfram and magnesite.
·         Austria’s sovereign debt grows rather fast. Today it is equal to 68,6% of the national GDP. Though in Germany it is higher - 74,8%;
·         Social spending has been a burden for the country’s budget over the last few years. It takes over 30% of the GDP.
·         High taxes. The taxes are really high and they keep growing. That is why small-scale businesses try to evade taxes while big-scale ones transfer their funds to Switzerland and Liechtenstein.
·         Difficult demographic situation. The population ageing is immense while the birth rate is tiny. In terms of birthrate Austria comes 217th (8,65 births/1,000). However, in Germany the situation is worse - it comes 220th in the rating. Even monthly child benefits (€150/m for each child) seem to be of no help.
·         Migrants. The Austrian authorities try to solve the problem connected with the lack of labor power at the expense of migrants. In May 2011 Austria allowed labor migrants from new EU countries to freely come and work in the country. The inflow of migrant workers dramatically increased. By now 15,5% of employees were born abroad while 10,5%  are the citizens of other states.  The thing is that most migrant workers are low-skilled.
 
Market Leader and Masterforex-V Academy would be very grateful to you for participating in a survey. Please, visit the Academy’s forum and answer the question given below:
 
Will Austria’s temporary economic problems affect its investment attractiveness?
·         Yes, they will
·         No, they won’t
·         Your own opinion
 

 

 

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