Austrian Trade with Eastern Europe since 1989

The political change in the countries to its East has had a sustained impact on Austrian foreign trade. Exports to the East tripled in just eight years, their share rising from 9.9 percent to 17.6 percent. The only post-war event of comparable effect was the split of Western Europe into EEC and EFTA in 1959. At that time, Austria was faced primarily with a temporary shift in trade flows, but after 1989 it was able to gain additional markets in the East. Austrian imports from these countries similarly expanded at an above-average pace, rising 2.5-fold. The Eastern share of imports grew from 6.8 percent in 1989 to 11 percent in 1997. Over the same period, the export surplus increased from ATS 7.5 billion to 39 billion. "Cheap" Eastern imports dampened inflation in Austria and, as low-cost inputs, improved Austrian exporters' competitive position internationally. Yet although benefits of the Eastern opening clearly outweighed its disadvantages, the structural change required in its wake still placed a heavy burden on the Austrian social partners and on the country's economic policy. Problems arose in particular from the circumstance that gains and losses of the Eastern opening were unequally distributed across regions, industries and jobs.