Vienna's Manufacturing Sector in the Knowledge-based Urban Economy. Developments, Competitiveness, Industrial Policy Topics

Based on recent debates of opportunities to "re-industrialise" highly developed countries and regions, the study develops a theoretically and empirically founded assessment of the importance and future role of manufacturing in the urban region of Vienna. To this end, the arguments of the "new industrial revolution" advocates are confronted with the findings of economic research on the determinants of de-industrialisation in highly developed locations. From this it appears that any genuine "re-industrialisation" of urban locations such as Vienna is unlikely at the employment side albeit it might be possible to stabilise the sector on the output side. Subsequent empirical analysis takes an in-depth look at the regional requirements for such a course, using, i.a., a new dataset that for the first time allows comparing the development of industry in Vienna to that in the other 255 European metropolitan regions at the level of a functional urban region (the city and its surroundings). It was found that the urban region of Vienna shows a negative job development for manufacturing in the medium term, also when compared to urban competitors in Europe, making it strongly "de-industrialised" even in this context. Nevertheless, the redimensioning effort found a concentration of high- and medium-high-tech industrial sectors and a productivity position that is favourable compared to other urban regions, so that manufacturing loses little of its share in outputs. The locational terms offered to manufacturing are not too bad in Vienna, and the remaining manufacturing operations are highly competitive when it comes to their research focus and inclusion in international markets. Seen against this generally favourable background, consideration is given to the design and focus of a "modern" industrial policy for the urban region which should be able to foster and support the development of a modern, knowledge-based industry in Vienna.