Vienna and the Challenge of International Competition. Growth and Economic in a Changing Environment

Considering the negative employment growth in Vienna since 1995 (1995-2003: –0.5 percent p.a., compared to +0.4 percent p.a. for Austria), doubts appear due, at least at first glance, whether the Viennese economy can keep pace with growing locational competition from other European cities. An analysis based on a harmonised data set for major European cities and a large-scale survey among Viennese businesses nevertheless comes to a mostly positive conclusion. The results show relatively high economic growth, in the long term, for Vienna as a location, achieved at persistently good progress in productivity, although without any significant job gains. Structural change is rapid and proceeds in a direction suitable for the new economic framework. Local enterprises generally have a positive view of the quality of regional location factors, and over the past five years their assessment of key fields has further improved. Nevertheless, the analysis also indicates the need to identify a clear position for Vienna within the system of European cities. The analysis recommends greater functional specialisation based on the locational advantages offered by the EU's enlargement, a course which, however, preconditions a stronger focus on quality and technology in domestic production.