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Industry Determines Rate of Regional Recovery

Gerhard Palme
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Gerhard Palme: WIFO

WIFO Monatsberichte (monthly reports), 1997, vol. 70, issue 5, 311-320

Abstract: When the economy began to pick up again in late 1996, the pattern of regional cycles was found to have changed. In contrast to the downturn and bottom of the last recession and upswings of former cycles, economic development was weaker in the western regions of Austria than in the east. Aided by accelerated demand from industries and construction, companies in the eastern half of Austria (eastern region plus Styria and Upper Austria) were able to escape the trough more rapidly. In western Austria and Carinthia, on the other hand, industries received less momentum from export demands for primary products, and the tourist industry continued to battle structural problems. In Burgenland, Lower Austria, Upper Austria and Styria, economic growth during the difficult year of 1996 was slightly better than the Austrian average (+1,0 percent in real terms). In Vienna, Vorarlberg and Tyrol the rate was slightly lower, while Carinthia and Salzburg showed a much weaker development. Almost all the Austrian states registered a substantial improvement in mid 1996. Propelled by the demand for restocking with primary products, production revived most in those states which have a long industrial tradition (Lower Austria, Upper Austria, Styria and Vorarlberg). The structural crisis experienced by the tourist industry as a consequence of consumer preference for exotic holidays continued unabated in 1996, affecting primarily the intensely tourist-specialized regions in the west and in Carinthia which had focused on guests from Germany. Regions in the east of Austria, on the other hand, which offer targeted modern programs for Austrian guests emphasizing health and sports, enjoyed continued popularity in the past year. Growth rates were particularly high in Vienna, due to stabilization of the currency markets. Employment matched regional production trends: job losses in 1996 were greatest in the still contracting services-based states (Vienna, Salzburg, Carinthia). The only new jobs to be created were in the Burgenland, a target 1 region of EU-structural fonds. Increased demand slightly relieved the job market in Styria and Tyrol, while unemployment rose disproportionately in Salzburg, Carinthia and Vorarlberg. Nevertheless, the average unemployment rate remained below the Austrian average in the west, and was highest in the south and south-east due to the large share of seasonally unemployed in rural areas (Carinthia, Burgenland, Styria).

Keywords: Industrie determiniert regionale Konjunkturerholung. Die Wirtschaft in den Bundesländern 1996; Industry Determines Rate of Regional Recovery (search for similar items in EconPapers)
Date: 1997
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Handle: RePEc:wfo:monber:y:1997:i:5:p:311-320