2016 Index of Economic Freedom

Austria

overall score71.7
world rank28
Rule of Law

Property Rights90.0

Freedom From Corruption72.0

Limited Government

Government Spending22.4

Fiscal Freedom50.7

Regulatory Efficiency

Business Freedom79.4

Labor Freedom72.5

Monetary Freedom81.7

Open Markets

Trade Freedom88.0

Investment Freedom90.0

Financial Freedom70.0

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Quick Facts
  • Population:
    • 8.5 million
  • GDP (PPP):
    • $395.5 billion
    • 0.3% growth
    • 1.3% 5-year compound annual growth
    • $46,420 per capita
  • Unemployment:
    • 5.0%
  • Inflation (CPI):
    • 1.5%
  • FDI Inflow:
    • $4.7 billion
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Austria’s highly developed and resilient economy sustains high levels of prosperity. Openness to global trade and investment is firmly institutionalized and supported by a relatively efficient entrepreneurial framework. Austria has a strong tradition of reliable protection of property rights, and the legal system is transparent and evenly applied. Effective anti-corruption measures are in force.

Economic Freedom Snapshot

  • 2016 Economic Freedom Score: 71.7 (up 0.5 point)
  • Economic Freedom Status: Mostly Free
  • Global Ranking: 28th
  • Regional Ranking: 15th in Europe
  • Notable Successes: Rule of Law, Regulatory Efficiency, and Open Markets
  • Concerns: Fiscal Freedom and Government Spending
  • Overall Score Change Since 2012: +1.4

Though the corporate tax rate is comparatively low, high social security contributions and personal income tax rates discourage labor force participation and undermine dynamic growth. The overall tax burden remains quite high, and public spending accounts for about half of GDP. Reforms to increase labor market flexibility and competition in the services sector remain critical.

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Background

The center-left Social Democratic Party and center-right Austrian People’s Party coalition, led by Social Democrat Chancellor Werner Faymann, lost seats in September 2013 but retained a governing majority. Eurosceptic parties made gains. Austria’s economy has been relatively resilient through the eurozone crisis, outperforming many other EU economies. Austria still boasts one of the world’s highest GDPs per capita, but recent overall GDP growth has been modest. Government debt is growing. The government has gradually relinquished control of formerly nationalized oil, gas, steel, and engineering companies and has deregulated telecommunications and electricity. Austria has large service and industrial sectors and a small, highly developed agricultural sector.

Rule of LawView Methodology

Property Rights 90.0 Create a Graph using this measurement

Freedom From Corruption 72.0 Create a Graph using this measurement

A 2014 EU anti-corruption report said the government had increased its prevention and prosecution efforts against corruption, which is relatively rare and widely reported in the media. The independent judiciary provides effective protection for the property and contractual rights of nationals and foreigners. The land registry is a reliable and publicly accessible system for recording interests in property.

Limited GovernmentView Methodology

The top income tax rate is 50 percent, and the top corporate tax rate is 25 percent. Other taxes include a value-added tax and a tax on real estate transfers. High social security contributions are shared between employers and employees. The overall tax burden equals 42.5 percent of total domestic income. Government spending continues to account for over half of total domestic output, and public debt equals approximately 87 percent of GDP.

Regulatory EfficiencyView Methodology

An efficient regulatory framework facilitates innovation, although the absence of major reforms has undermined international competitiveness. There is no nationally mandated minimum wage, but the cost of fringe benefits is very high. Although state-owned VERBUND is Austria’s largest electricity provider, the government sparked tensions with the United Kingdom in 2015 by opposing EU subsidies for an Anglo–French nuclear power plant.

Open MarketsView Methodology

The EU has a low 1 percent average tariff rate, and most member countries have relatively low non-tariff barriers. Austria screens investments in some strategic sectors, but its overall trade and foreign investment climate is one of the most open in the world. There are no controls on currency transfers or repatriation of profits. The competitive financial sector continues to offer a wide range of financial services.

Country's Score Over Time

Bar Graph of Austria Economic Freedom Scores Over a Time Period

Country Comparisons

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Regional Ranking

rank country overall change
1Switzerland810.5
2Ireland77.30.7
3Estonia77.20.4
4United Kingdom76.40.6
5Denmark75.3-1.0
6Lithuania75.20.5
7The Netherlands74.60.9
8Germany74.40.6
9Luxembourg73.90.7
10Iceland73.31.3
11Czech Republic73.20.7
12Georgia72.6-0.4
13Finland72.6-0.8
14Sweden72-0.7
15Austria71.70.5
16Norway70.8-1.0
17Latvia70.40.7
18Poland69.30.7
19Cyprus68.70.8
20Spain68.50.9
21Belgium68.4-0.4
22Macedonia67.50.4
23Armenia67-0.1
24Malta66.70.2
25Slovakia66.6-0.6
26Hungary 66-0.8
27Albania65.90.2
28Bulgaria65.9-0.9
29Romania65.6-1.0
30Portugal65.1-0.2
31Montenegro64.90.2
32France62.3-0.2
33Serbia 62.12.1
34Turkey62.1-1.1
35Kosovo61.4N/A
36Italy61.2-0.5
37Slovenia60.60.3
38Croatia59.1-2.4
39Bosnia and Herzegovina58.6-0.4
40Moldova57.4-0.1
41Greece53.2-0.8
42Russia50.6-1.5
43Belarus48.8-1.0
44Ukraine46.8-0.1
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