Austria is a parliamentary representative democracy consisting of nine federal states and is one of two European countries that have declared their everlasting neutrality, the other being Switzerland. Austria is a member of the United Nations (since 1955) and the European Union (since 1995). For the first half of 2006 Austria holds the seat of the Presidency of the EU.Austria has a well-developed social market economy and a high standard of living. Until the 1980s many of Austria's largest industry firms were nationalised, however in recent years privatisation has reduced state holdings to a level comparable to other European economies. Labour movements are particularly strong in Austria and have large influence on labour politics.Germany has historically been the main trading partner of Austria, making it vulnerable to rapid changes in the German economy. Slow growth in Germany and elsewhere in the world affected Austria, slowing its growth to 1.2% in 2001.
But since Austria became a member state of the European Union it has gained closer ties to other European Union economies, reducing its economic dependence on Germany. In addition, membership in the EU has drawn an influx of foreign investors attracted by Austria's access to the single European market and proximity to EU aspiring economies. Therefore estimates of growth in 2005 (up to 2%) are much more favourable than in the crippling German economy.Agriculture: Austrian farms, like those of other west European mountainous countries, are small and fragmented, and production is relatively expensive.Industry: Although some industries, such as several iron and steel works and chemical plants, are large industrial enterprises employing thousands of people, most industrial and commercial enterprises in Austria are relatively small on an international scale.Services: Like in other western countries, the biggest contributor to Austria's GDP is its service sector. Most notably is tourism, especially winter tourism.To meet increased competition from both EU and Central European countries, Austria will need to emphasize knowledge-based sectors of the economy, continue to deregulate the service sector, and lower its tax burden. |
