Since the beginning of the nineties, Austria has become as one of the most important foreign direct investors in Central and Eastern European Countries (CEEC)1. Employment in Austrian affiliates located in the East and Central European countries (CEEC) increased from 50.000 to 233.000 in the period 1993 to 2003. In 2003, the employment share of foreign affiliates of Austrian multinationals in the CEEC as a share of total foreign employment was about 71%, which is the highest share in the OECD area.
While outward FDI has given an important drive to the internationalisation process of the Austrian firms from which many positive impulses to the Austrian economy have been supported empirically, the strong foreign involvement of Austrian firms has also given rise to fears that the relocation of labour intensive production to low-wage countries would “export jobs” and reduce employment at home. From theory as well as from many empirical studies on FDI we know that much of the effects on the home economy depend on the type of FDI. While positive effects can be expected from horizontal FDI, the impact of vertical FDI is not clear a priori (Becker – Jäckle – Mündler, 2005). Vertical FDI may lead to exports from the parent company to its foreign affiliates, increase productivity and international competitiveness but still substitute employment at home.
In the course of policy formulation, it is impractical to rely on unassisted intuition. Models provide a logical abstract template to sort out complicated chains of cause and effect, and influence between the numerous interacting variables in an economy. By virtue of their logically consistent framework, they can provide the analyst and policymaker with a valuable economic representation of the sector and a laboratory for testing ideas and policy proposals (Hazel and Norton, 1986:2). Though imperfect abstractions, economists can experiment, at least logically, the effect of alternative policy options. Models have become a useful devise for formulating plans and investigating trade-offs. They are used mainly for forecasting, consistency checks and optimisation. It must be emphasized that while models provide a formal and quantified framework that is an irreplaceable adjunct to the processes of policy thought, they are not substitutes for the exercise of reasoning, judgement and political choice.
More than sixty years of experimentation, since Jan Tinbergen formulated the first structural macroeconomic model for the Dutch economy in 1936, has brought considerable progress in the field. Macroeconomic models have undergone a lot of refinement in line with the changing economic paradigm, new research on economic theory, development of new algorithms to solve large non-linear systems of equations, and advances in computer hardware and software, which have led to richer and more complex models. A wide spectrum of choice is now available, ranging from sectoral to economy-wide models, static to dynamic and short to long term incorporating insights of many theoretical approaches including Keynesian, neoclassical, monetarist, supply-side, and rational expectations.
This manual includes the latest information at the time it was printed. We reserve the right to make changes after that time without further notice. For vehicles first sold in Canada, substitute the name “General Motors of Canada Limited” for Oldsmobile Division whenever it appears in this manual.
