The Importance of Competition for Growth and Employment in Austria

The level of competition in an economy is an important determinant for growth in a highly developed country. Traditionally the significance of competition as a driver of growth has been totally underestimated in Austria. Competition was only introduced into many sectors following accession to the EU and the opening up of the eastern European markets. Increased competition accelerated the general dynamic of the economy in Austria, as can be seen by the balance of the trade account and the increase in the surplus in the balance of payments. Competition policy was adapted accordingly, protectionist thoughts were pushed to the back of the mind, and the establishment and growth of small and medium sized businesses was proactively fostered and took centre stage. Nevertheless all international comparisons reveal weaknesses in competition policy. They criticise not only regulations which protect quality but also ones which impede entrance to the market, innovation and the fulfilment of customer demands. If an active competition strategy was taken on board growth, productivity and employment could all be increased. An example of this is Denmark where an active competition policy has contributed to high income levels, social protection and a high environmental standard.