The objective of this study is to investigate the link between industrial structure and macroeconomic performance in terms of income levels and growth. The study has been motivated by the repeated observation of pronounced deficits in the industrial structure of the Austrian economy – strikingly contrasted by the general perception of its good macroeconomic performance. Panel regressions confirmed that structural change with respect to specific types of industry is a significant determinant of aggregate income levels and growth. The empirical evidence thus substantiates our concern with regard to the Austrian paradox. Industrial structure does matter, and over the long term the lack of structural change in favour of technologically progressive industries implies the danger of a "growth penalty". The immediate consequences, however, appear to be small and therefore easily escape public attention. The observation of at least average growth performance during the past cannot eliminate the relevance of the Austrian technology gap. It can only suggest the importance of other determinants of economic growth, which so far have been able to compensate for Austria's deficits in industrial structure. Among these, geographic proximity to dynamic markets and suppliers, a coherent macroeconomic policy, industrial relations and a certain entrepreneurial competence for adaptive specialisation have been singled out as important elements to explain past growth performance. However, not all of the above pieces in the Austrian growth puzzle could be sustained. The potential for additional growth through technological catching-up already disappeared in the 1980s. Participation in the Economic and Monetary Union marked another turning point, at which the concept of a national, demand-oriented macroeconomic policy lost its feasibility. In the light of persistent structural deficits in the sectoral composition of Austria's production, a farsighted concept of economic policy requires better understanding of the link between meso-structures and macro-performance. The study concludes with emphasising three general functions the economic system must achieve in order to support growth and structural change: novelty by entrepreneurship and innovation, the cumulation of productive resources through learning and capital investment, and finally free markets as fair means of selection.
Eine Neubetrachtung des "Österreich-Paradoxon"; The Austrian Paradox Revisited
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