Innovation-Landscape of Austria

Innovation is one of the primary factors contributing to a country’s economic growth. It is especially true today when nations continuously compete to prosper in a globalized world economy.

That is why the Austrian Economics Center (AEC) and fellow members of the Global Trade & Innovation Policy Alliance (GTIPA) collaborated to produce the “Transatlantic Subnational Innovation Competitiveness Index 2.0” (TASICI 2.0), a report analyzing the innovation landscape of 121 regions of Austria, Germany, Hungary, Italy, Poland, Sweden, and the United States.

The report examines the subnational innovation dynamics using 13 indicators that positively contribute to the robustness of a region’s innovation ecosystem. These indicators are grouped into three categories: Knowledge-Based Workforce, Globalization, and Innovation Capacity. Of these categories, the region’s Innovation Capacity has the highest weight in the index calculation.

For the purposes of this report, Lower Austria and Vienna have been combined into a single region, securing 14th place in the overall index rankings. The remaining Austrian regions, namely Styria, Upper Austria, Tyrol, Vorarlberg, Salzburg, Carinthia, and Burgenland, achieved rankings of 16th, 35th, 38th, 39th, 50th, 62th, and 113th, respectively. Based on the report’s innovation competitiveness categorization, Lower Austria/Vienna and Styria regions are considered innovation leaders, while Burgenland is in the lowest category.

The indicator group in which the Austrian regions demonstrate the highest scores is Innovation Capacity. It is noteworthy that among the 121 regions, Austria’s Vorarlberg region has the highest level of patent applications, even surpassing innovation hubs such as the U.S. State of California. Additionally, most Austrian regions stand out in the research and development (R&D) field. To illustrate, only the U.S. State of New Mexico and Germany’s Baden-Württemberg region rank higher in the R&D expenditures (as a share of GDP) than Styria. Another factor enhancing the Austrian innovation ecosystem is its high level of skilled immigrants. Austria, Sweden, and the U.S. lead the rankings in this aspect.

While Austrian regions perform well in the Innovation Capacity category, they noticeably lag behind in the Globalization category. Specifically, the size of the Austrian high-tech exports is among the lowest in the group, with neighboring Hungary and Germany significantly outperforming. What is more, Austrian regions exhibit the lowest levels of foreign direct investment (FDI), another important indicator of an innovation landscape.

In the final sections, the report offers policy recommendations for the seven countries. Among other recommendations, it suggests that the Austrian government should further simplify immigration procedures for skilled workers. Also, to increase the country’s high-tech exports and attract more foreign investment, the report suggests reducing trade barriers and minimizing regulations. Lastly, while acknowledging the robustness of the Austrian innovation landscape, the report recommends decreasing regulations and tax burden for businesses and research institutions to encourage private investment in innovation.

Read the full report.