The paper 'The Drivers of Competitiveness for the Economy of Austria" is a perfect example of a macro and microeconomics case study. Austria was condensed to a small republic after its defeat in World War-I that was the center of power for the large Austro-Hungarian Empire. Austria's status remained unclear for a decade after an occupation by Germany in 1938 and successive occupation by the victorious Allies in 1945. In 1955, a State Treaty was signed for the end of the occupation and recognition of Austria's independence. Austria forbade its emergence along with joining Germany.
Constitutional law was declared same year which proved the country's "perpetual neutrality" as a provision for Soviet military withdrawal. In 1995, the Soviet Union collapsed and Austria entered into the European Union in 1995 that has changed the meaning of this neutrality. In 1999, as a prosperous and democratic country, Austria entered the European Union Economic and Monetary Union. Geographical location: The geographical location of a country plays a very important role in carrying out its trade and business activities. That’ s why the geographical location of Austria is described here briefly in order to understand the role of its geographical location in its economy.
The total area of Austria is 83,870 square kilometer. The total land is 82,444 square kilometer and water occupies 1,426 square kilometer. The land boundaries of a country also help to carry out trade with its neighbouring countries. The total area that defines its boundary is 2,562 kilometers. Border countries are the Czech Republic with 362 kilometers boundary, Germany with 784 kilometers, Hungary with 366 kilometers, Italy with 430 kilometers, Liechtenstein with 35 kilometers, Slovakia with 91 kilometers, Slovenia with 330 km, and Switzerland with164 kilometers.
The climate of the country is temperate, cloudy; cold winters with regular rain and some snow in lowlands and mountains, and moderate summers with intermittent showers. The Natural resources of the country include oil, coal, lignite, timber, iron ore, copper, zinc, antimony, magnesite, tungsten, graphite, salt, and hydropower. The use of land is arable land is 16.59%, permanent crops are 0.85% and others is 82.56%. Total irrigated land is 40 sq km. Economy: Austria has a highly sensitive social market economy with an elevated standard of living.
Austria has a well-developed industry, banking, transportation, services, and commercial facilities. Most commercial and industrial ventures in Austria are relatively small on an international scale. Starting of new business plays an important role in maintaining as well as creating a good and integrated market economy. Besides this, it looks appropriate to examine whether start-up success factors also differ in this context as the business environment differs in established and emerging market economies. Austria chose for an exchange rate hook at a time in 1974 when the economic optimum currency area (OCA) fundamentals were not yet met.
Between 1979 and 1981, it needed gratitude of the schilling relative to the D Mark to signal a hard decree and to earn trustworthiness. This hard currency option triggered off adjustment processes i. e., real wage flexibility, which ultimately made Austria part of an optimum currency area with Germany. A model demonstrates that for a small economy such as Austria an exchange rate rule constitutes a good focal point by using the theory of time consistency. As can be shown for Austria, a successfully fixed exchange rate rule in the face of asymmetric shocks and restricted factor mobility requires a relatively high degree of real wage flexibility.
Only a trustworthy long-term policy enables a country to fulfill the OCA-criteria. At least between smaller countries and an anchor country, therefore Austria may be viewed as an example for a fixed exchange rate system, even if an OCA criterion initially is not being met. (Defourny, Campos, 1992).
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