Export Guarantees in Austria. Impact on Employment and Macroeconomic Indices

Federal guarantees under the Export Promotion Act (AusfFG) handled by Oesterreichische Kontrollbank (OeKB) on behalf of the Austrian Federal Ministry of Finance are granted to facilitate exports and foreign direct investment by Austrian businesses in high-risk markets. The study examines the effect that federal guarantees have on the value added in Austria, on domestic employment and on the balance on current account, based on a poll of businesses. The WIFO survey found that companies obtaining such a guarantee differ considerably from otherwise comparable enterprises and have a more regionally diversified export structure. The findings of the poll were used to develop a time-structured impact analysis of the export guarantees. According to the simulation results, abolishing such export guarantees would cause export losses and a decline in GDP. Employment and unemployment would also respond on the negative side. A comparison of business sectors found that mechanical engineering would be most strongly affected, but indirect negative effects would also occur in wholesale trading and business services, including R&D. While the direct effects of guarantees on export activities are not clearcut, FDI clearly makes for an increase in revenues and in this way provides a sustained positive contribution to the Austrian balance of payments.