Austria R&D spending increasing but reform agenda not working

Industry and exporters in Austria are concerned with their futures as productivity growth weakens, and costs are rising quickly. Lack of confidence in the industry depressed investment and has kept economic growth at a very slow rate. Despite these industry fears, the government has made positive changes to tax incentives which has meant Austria has seen R&D spending increasing nationally.

Austrian business believes the governments have not acted to account for the seriousness of the problems facing business, potentially threatening the foundations on which Austrian postwar prosperity was built.

The government has helped by improving the incentives for R&D, in particular by raising the amount of cash or tax credit given to companies from 10 per cent to 12 per cent of the money invested. Austria has raised its R&D spending to 3 per cent of GDP, the fifth highest in Europe, says Mr Aiginger, and even the ambitious target of 3.76 per cent of GDP by 2020 is not out of reach if more private funding can be raised.

Austria also needs new innovative companies. “Regulation and lack of start-up capital inhibit entry of innovative new firms, undermining economic dynamism,” says the OECD survey.

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