Lack of Efficiency Slows Down Growth

Thanks to its speed of catching up with the top league, Austria has joined the group of countries with the highest living standards; yet any further improvement requires that potentials for improving efficiency are explored. In almost all fields Austria achieves its success only by an excessive input or finds itself inadequately successful compared to the high input. Public administration and government subsidies could obtain their relatively good results with considerably less input; education and health care are faced with inadequate results thanks to their wrong use of funds; and institutions that foster innovation overlook that any rise in the R&D rate will yield the desired innovations only if the organisational structure is substantially changed. Altogether, it would be possible to boost efficiency by at least 10 to 20 percent, although this requires more than administrative reforms such as merging the decision-making with the financing level, improving organisational flows or restructuring expenditures. Reforms would need to focus on the interface between administration and politics: it is necessary to develop some basic understanding at the political level on desirable developments, break these down to concrete and consistent targets and monitor their implementation.