2019 Index of Economic Freedom

Austria

overall score72.0
world rank31
Rule of Law

Property Rights84.2

Government Integrity77.4

Judicial Effectiveness71.3

Government Size

Government Spending24.5

Tax Burden50.5

Fiscal Health85.5

Regulatory Efficiency

Business Freedom74.9

Labor Freedom68.7

Monetary Freedom81.5

Open Markets

Trade Freedom86.0

Investment Freedom90.0

Financial Freedom70.0

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Quick Facts
  • Population:
    • 8.8 million
  • GDP (PPP):
    • $439.6 billion
    • 2.9% growth
    • 1.3% 5-year compound annual growth
    • $49,869 per capita
  • Unemployment:
    • 5.5%
  • Inflation (CPI):
    • 2.2%
  • FDI Inflow:
    • $9.6 billion

Austria’s economic freedom score is 72.0, making its economy the 31st freest in the 2019 Index. Its overall score has increased by 0.2 point, with higher scores for government spending, fiscal health, government integrity, and labor freedom offsetting a steep drop in judicial effectiveness. Austria is ranked 16th among 44 countries in the Europe region, and its overall score is above the regional and world averages.

The government’s efforts to improve the business environment historically have included reducing corporate tax rates and introducing more flexible working hours and other labor market reforms. Austria’s small but well-developed economy is highly globalized and resilient, sustained by a skilled labor force, competitive manufacturing, and a large services sector. Openness to global trade and investment is firmly institutionalized, and the relatively efficient entrepreneurial framework strengthens competitiveness. Protection of property rights is traditionally strong, the legal system is transparent and reliable, and anticorruption measures are effective.

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Background

Austria regained full sovereignty from the World War II victors in 1955. Alexander Van der Bellen, a Green Party member running as an independent, was elected to the largely ceremonial role of president in 2016. Sebastian Kurz of the conservative People’s Party became chancellor in 2017 after forming a coalition government with the populist Freedom Party. Kurz campaigned on promises to tighten immigration controls, cut taxes, and make Austria more business-friendly. During its July–December 2018 presidency of the European Union, Austria focused on security improvements in the common external border. Austria has large services and industrial sectors and a small, highly developed agricultural sector. Challenges include the assimilation of migrants and the strains on labor markets and public finances caused by an aging population.

Rule of LawView Methodology

Property Rights 84.2 Create a Graph using this measurement

Government Integrity 77.4 Create a Graph using this measurement

Judicial Effectiveness 71.3 Create a Graph using this measurement

Austria’s land registry is a reliable and accessible system for recording interests in property. The investment climate has been enhanced by the country’s stability and strong rule of law. The independent judiciary provides an effective means for protecting real and intellectual property rights and enforcing contracts. Corruption is relatively rare, although several former high-ranking officials were charged with bribery and embezzlement in 2018.

Government SizeView Methodology

The top income tax rate is 50 percent, and the top corporate tax rate is 25 percent. High social security contributions are shared by employers and employees. The overall tax burden equals 42.7 percent of total domestic income. Over the past three years, government spending has amounted to 50.2 percent of the country’s output (GDP), and budget deficits have averaged 1.2 percent of GDP. Public debt is equivalent to 78.8 percent of GDP.

Regulatory EfficiencyView Methodology

Although the transparent and efficient regulatory framework generally facilitates productivity growth, a large public sector and extensive bureaucracy prevent Austria from being more business-friendly. Nonwage labor costs are still very substantial. The labor force is highly skilled, and labor–management relations are always amicable. The government continues heavy subsidies for renewable energy sources and electric vehicles.

Open MarketsView Methodology

The combined value of exports and imports is equal to 104.7 percent of GDP. The average applied tariff rate is 2.0 percent. Austria implements a number of EU-directed nontariff trade barriers including technical and product-specific regulations, subsidies, and quotas. Complex regulations may impede investment. The competitive and stable financial sector offers a wide range of services.

Country's Score Over Time

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Regional Ranking

rank country overall change
1Switzerland81.90.2
2Ireland80.50.1
3United Kingdom78.90.9
4Iceland77.10.1
5Netherlands76.80.6
6Denmark76.70.1
7Estonia76.6-2.2
8Georgia75.9-0.3
9Luxembourg75.9-0.5
10Sweden75.2-1.1
11Finland74.90.8
12Lithuania74.2-1.1
13Czech Republic73.7-0.5
14Germany73.5-0.7
15Norway73-1.3
16Austria720.2
17Macedonia71.1-0.2
18Latvia70.4-3.2
19Bulgaria690.7
20Malta68.60.1
21Romania68.6-0.8
22Cyprus68.10.3
23Poland67.8-0.7
24Armenia67.7-1.0
25Belgium67.3-0.2
26Kosovo670.4
27Albania66.52.0
28Spain65.70.6
29Slovenia65.50.7
30Portugal65.31.9
31Hungary 65-1.7
32Slovakia65-0.3
33Turkey64.6-0.8
34Serbia 63.91.4
35France63.8-0.1
36Italy62.2-0.3
37Bosnia and Herzegovina61.90.5
38Croatia61.40.4
39Montenegro60.5-3.8
40Moldova59.10.7
41Russia58.90.7
42Belarus57.9-0.2
43Greece57.70.4
44Ukraine52.30.4
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