OeNB-Report 2025/4: Direct investment 2022. Austrian outward and inward direct investment at the end of 2022

Kujtim Avdiu, Maximilian Reiner, Esther Segalla, Klaus Vondra, Jacob Wagner, Julia Woerz (OeNB); Elisabeth Christen (WIFO); Tamás Ginter (Magyar Nemzeti Bank); Jochen Güntner, Karin Mayr-Dorn (Johannes Kepler University Linz).

Corresponding author: Kujtim Avdiu, Oesterreichische Nationalbank, External Statistics, Financial Accounts and Monetary and Financial Statistics Division, kujtim.avdiu@oenb.at .

This Direct Investment Special Issue provides the main findings of the full German-language version (Direktinvestitionen 2022) in a short English summary. It opens with an analysis of the most recent Austrian FDI survey results (finalized in 2024 for the 2022 reporting year, examines trends in global FDI, and explores the role Russia plays in the Austrian economy. It furthermore analyzes FDI patterns and regional priorities across Central, Eastern and Southeastern Europe and highlights the growing importance of intragroup lending in Austrian FDI. Key terms related to FDI statistics are explained in the section “Methods, definitions and sources”. More detailed results are provided in the appendix, which includes tables, maps and a figure.

1 Foreword

The Oesterreichische Nationalbank (OeNB) has been conducting foreign direct investment (FDI) surveys among businesses and individuals since the 1970s. Initially, the surveys focused on highlighting nonresidents’ influence on the Austrian economy, but very soon the OeNB also started surveying Austrian FDI abroad. As the economic importance of FDI increased over time, the survey intervals were shortened from every two years to once a year starting in 1989. At the same time, a reporting threshold was introduced to reduce the burden for respondents and compilers. Since the last major revision in the reporting year 2006, the assets of listed stock corporations have been provided at market prices, the definition of “Other direct investment capital” has covered a broader range of capital, and FDI stocks have been adjusted for the assets of special purpose entities (SPEs). While SPE assets (just like cross-border real estate assets) qualify as direct investment as used in the balance of payments, they are not part of the statistical analyses presented here given the absence of market activity in Austria. All lending between fellow enterprises has been treated as direct investment since the reporting year 2010 (in line with the 6th edition of the IMF’s Balance of Payments Manual, which the OeNB has applied since fall 2014). The direction of FDI between fellow enterprises is determined by the residency of the ultimate controlling parent: if the latter is resident in Austria, all relevant transactions and positions are classified as outward FDI, and vice versa. This Direct Investment Special Issue provides the main findings of the full German-language version ( Direktinvestitionen 2022 ) in a short English summary. In keeping with tradition, it opens with an analysis of the most recent Austrian FDI survey results (finalized in 2024 for the 2022 reporting year; section 2). Section 3 examines trends in global FDI, while section 4 explores the role Russia plays in the Austrian economy. Section 5 analyzes FDI patterns and regional priorities across Central, Eastern and Southeastern Europe. Section 6 highlights the growing importance of intragroup lending in Austrian FDI. As in previous editions, key terms related to FDI statistics are explained in section 7 (Methods, definitions and sources). More detailed results are provided in the annex (see section 8), which includes tables, maps and a figure (this annex is only available in the PDF version of this report).

2 Austrian direct investment growth softens after reaching peak levels

Jacob Wagner,

Maximilian Reiner ¹

In a challenging economic environment, Austrian FDI declined in both 2022 and 2023. Despite this downturn, net inward and outward transactions remained positive, reflecting broader global developments in FDI flows. ³ This pattern is expected to continue into 2024.

We analyze FDI stocks and flows in 2022 based on data collected during the 2024 annual survey on FDI among Austrian entrepreneurs. For 2023 and 2024, only preliminary data are currently available.

Austria’s outward FDI transactions have remained positive, though they have been decreasing since 2021 (chart 1), totaling EUR 15.5 billion in 2022 and EUR 10.8 billion in 2023. The decline in equity capital transactions was partially offset by higher positive transactions in other FDI capital ⁴ and, in 2022, by increased reinvested earnings. Austria’s outward FDI stocks rose from EUR 223.5 billion in 2021 to EUR 243.1 billion in 2022 and further to EUR 255.1 billion in 2023, supported in part by favorable price and exchange rate effects. The geographical distribution of Austria’s outward FDI stocks shifted slightly between 2021 and 2022, away from EU countries (–3.6 %) and other European countries (–0.2 %) toward Asia (+2.6 %) and America (+1.4 %).

Inward FDI transactions reached their highest level since 2007 in 2022, totaling EUR 15.7 billion (chart 2). Preliminary data for 2023 indicate a decline to EUR 6.3 billion. In 2022, reinvested earnings were high at EUR 10.3 billion, and other FDI capital transactions amounted to EUR 6.5 billion, whereas equity transactions stood at a negative EUR 1 billion. Inward FDI stocks increased only slightly (by EUR 1.2 billion) in 2022 as a result of significant offsetting other changes in volume, exchange rate changes and other price changes. ⁵ Investment patterns shifted away from the EU (–1.1% of the total stock), America (–1.2 %) and Asia (–1.1 %) toward other European countries (+2.7 %) and the rest of the world (+0.6 %).

Despite rising key interest rates, interest income (EUR 0.7 billion) and expenses (EUR 0.2 billion) played only a minor role in income growth in 2022, especially when compared to income on equity received (EUR 23.7 billion) and income on equity paid (EUR 19.8 billion).

3 Trends in global FDI

Kujtim Avdiu ⁶ ,

Elisabeth Christen ⁷

3.1 Global FDI: 2022 results and preliminary figures for 2023 and 2024

This report draws on verified and revised corporate data for 2022, while the figures for 2023 and 2024 remain preliminary.

In 2022, global FDI flows declined by 16.4 % to USD 1.36 trillion. This drop is largely attributed to the geopolitical and economic repercussions of Russia’s invasion of Ukraine, which triggered substantial uncertainty, disrupted supply chains, drove up energy prices and fueled inflation. Also, sanctions imposed on Russia contributed to a decline in investment both with and in the country. The situation was further exacerbated by escalating tensions between the USA and China, particularly in the form of investment controls or even bans in the technology sector. As a result, the stock market became less attractive, with the MSCI World Index declining by 20 % and global FDI stocks falling by 5.9 % to USD 44.4 trillion. This was the second-largest drop since the 2008 financial crisis (World Investment Report, 2023).

The downward trend in FDI flows continued in 2023, with a further 2 % decline to USD 1.3 trillion. This was primarily driven by the global economic slowdown, persistent geopolitical uncertainty and significant volatility in European pass-through economies, which distorted the statistics. Additionally, tighter financing conditions resulting from rising policy interest rates affected international project funding negatively, particularly in the infrastructure sector. Despite these headwinds, global FDI stocks rose by 11%, reaching USD 49.1 trillion in 2023. This growth was supported by improved financial market sentiment, falling inflation expectations, strong momentum in future-oriented industries such as artificial intelligence and renewable energy, and robust corporate earnings, especially in the USA (World Investment Report, 2024)

UNCTAD and other sources project a substantial 14.1 % increase in global FDI flows in 2024, which would bring the total to USD 1,520 billion. A significant share of this growth is attributable to pass-through countries, where FDI flows transit without generating substantial economic activity. This phenomenon is also observable in Austria’s direct investment patterns.

Overall, falling inflation, easing monetary policies and a recovering global economy are expected to reinforce the current momentum in investment activity.

3.1.1 Regional trends in 2022

The decline in FDI was most pronounced in developed economies, where inflows dropped by 41.8 % to USD 426.1 billion in 2022. By contrast, developing countries saw a 4.4 % increase in FDI, with inflows reaching USD 929.5 billion. As a result, developing economies attracted two-thirds of global FDI inflows, significantly surpassing the 60 % share recorded in 2021.

3.1.1.1 Trends in FDI inflows in 2022

In 2022, global FDI inflows declined particularly sharply in Europe, where inflows fell to – USD 111.6 billion, the first negative figure since records began in 1990. This drop was largely driven by corporate restructurings in Luxembourg, investors withdrawing from Russia and disinvestment activities in Switzerland and the Netherlands. Germany also recorded a notable decline, while France stood out by attracting a record inflow of USD 76 billion. By contrast, Asia saw a modest increase in inward FDI, reaching a new record of USD 765.8 billion. China, India and Singapore led global rankings, with China remaining the world’s second-largest recipient of FDI (USD 189 billion). In the Americas, FDI inflows fell somewhat to reach USD 574.4 billion. Accounting for around 57 % of this share, the USA remained the continent’s largest recipient of FDI. In South America, Brazil stood out by attracting a 44.8 % increase in inflows, bringing its total to USD 744 billion. Africa, after recording exceptionally high FDI inflows in 2021, experienced a 33.7 % decline to USD 54.4 billion in 2022. Chart 1 presents a regional breakdown of growth in inward FDI.

3.1.1.2 Trends in FDI outflows in 2022

In 2022, not only did inward FDI to Europe fall, but outward FDI from Europe also lost momentum: In fact, outflows dropped by 69 % to USD 217 billion, driven largely by capital withdrawals from Luxembourg. While Germany remained Europe’s largest outward investor, Ireland and France recorded significant declines. In Asia, outward FDI fell slightly, yet the region still accounted for 45 % of global outflows, totaling USD 709.9 billion. Despite the modest decline, Asian enterprises continued to lead globally in outward FDI activity in 2022.

Notably, China surpassed Japan to become the world’s second-largest investor, with outflows of USD 163.1 billion (down 8.8 %) compared to Japan’s USD 162.1 billion (down 22.4 %). The Americas saw a strong recovery in outward FDI, particularly in the USA, where outflows reached USD 366.4 billion, the highest level since 2011. The USA thus remained the world’s largest source of FDI. Chart 2 illustrates the regional differences in FDI outflow growth.

References

United Nations Conference on Trade and Development (UNCTAD). 2023. World Investment Report 2023 .

United Nations Conference on Trade and Development (UNCTAD). 2024. World Investment Report 2024 .

4 Russia becoming less important to Austrian economy

Klaus Vondra ⁸ ,

Kujtim Avdiu ⁹

4.1 Austria’s trade relations with Russia since 2014

Since the onset of Russia’s aggression against Ukraine (2014 and 2022, respectively), trade relations between Austria and Russia have deteriorated significantly, with Russia losing importance as a trading partner for the Austrian economy. Prior to the annexation of Crimea, Russia was Austria’s tenth-largest export market, accounting for 2.8 % of total Austrian goods exports in 2013. By 2021 (one year before Russia’s attack on Ukraine), this share had declined to 1.2 %, and by 2024, it had dropped further to only 0.5 %. In the ranking of Austria's most important trading partners, Russia dropped to 30th place. Between 2022 and 2024, Austria’s goods exports to Russia fell by 37 %. A closer look at trade patterns reveals that many goods previously exported directly to Russia are now being rerouted through third countries, including, in particular, Türkiye, Serbia and the Commonwealth of Independent States. We see that the sanctions have led to a diversion rather than a cessation of trade with Russia. The war that started in 2022 triggered a sharp rise in gas prices in 2022 and 2023: Until 2023, approximately 80 % of Austria’s gas imports had originated from Russia. The combination of declining exports, Austria’s dependence on gas imports and soaring gas prices turned the bilateral goods trade balance as well as the current account negative, despite the latter having traditionally remained in surplus (chart 1).

4.2 Austrian FDI vis-à-vis Russia

4.2.1 Austrian enterprises operating in Russia

For many years, Russia was a rather small but highly profitable target market for Austrian direct investors. In 2022, Austria’s investment volume stood at EUR 8.8 billion in Russia, representing 3.2 % of total outward investment. The bulk of transactions was driven by reinvested earnings, which accounted for 73 % of Austrian investments in Russia between 2007 and 2022 due to the limited distribution of dividends during that period.

In 2023, FDI stocks fell by 30 % to EUR 6 billion in 2023, accompanied by a 10 % drop in the number of Austrian enterprises engaged in Russia in 2022 and again in 2023; this downward trend continued into 2024.

4.2.2 Russian FDI in Austria

In 2023, Russian FDI in Austria totaled EUR 22.5 billion, making Russia the second-largest foreign investor in the country after Germany. Despite this substantial volume, Russian investments were concentrated in only a few sectors and enterprises, employing just 548 people in 2022. From 2007 to 2022, the average rate of return on Russian FDI in Austria was only 0.9 %. This is notably low compared to the 19 % return on Austrian FDI in Russia and the 5.9 % average return on inward FDI in Austria.

The low return on inward FDI in Austria from 2007 to 2022 is largely due to Austria’s role as a transit country. As shown in chart 2, more than 76 % of capital inflows were subsequently reinvested in other countries. This pattern is expected to shift following the suspension of the double taxation agreement at the end of 2023.

5 Trends and regional concentration of investment in Central, Eastern and Southeastern Europe

Tamás Ginter ¹⁰ ,

Kujtim Avdiu ¹¹ ,

Julia Wörz ¹²

5.1 EU-15 as leading investors in the CESEE region

Even 35 years after the fall of the Iron Curtain, investors from EU-15 countries continue to dominate in the CESEE region. The region remains an attractive destination for investment due to its economic growth, geographic proximity to the EU-15 and competitive production costs, lending itself, in particular, to near-shoring activities. As of the end of 2022, around 64.7 % of FDI in CESEE originated from EU-15 countries.

Chart 1 depicts inward FDI stocks in the CESEE region, highlighting the most prominent investors. The Netherlands and Luxembourg play a central role, primarily as financial hubs for multinational enterprises rather than as direct investors in local operations. In 2022, the Netherlands held the largest share of FDI stocks at 19 %, followed by Luxembourg at 9 %. Germany ranked as the second-largest investor overall, contributing 10.7 % of total FDI, with a strong focus on Poland, Hungary and Romania; in each of these countries, Germany has become the second-largest investor, surpassed only by the Netherlands. In Lithuania and Kosovo, Germany was the leading foreign investor.

5.2 Austria’s key role in CESEE investments

Austria ranked third among the top investors in the CESEE region in 2022, with a total investment volume of EUR 90.3 billion, representing 7.6 % of all FDI in the region. In Southeastern Europe, Austrian investors have secured a leading position, taking advantage of favorable conditions such as a central geographic location, well-developed infrastructure, political stability and attractive tax conditions. Specifically, Austrian enterprises were the largest investors in Slovenia, Croatia, Bosnia and Herzegovina and North Macedonia and ranked as the second-largest investors in Bulgaria, Serbia and Slovakia in 2022.

Moreover, Austrian investments in the CESEE region have proven especially profitable. Between 2008 and 2022, they achieved an average return on equity of 10.3 %, significantly outperforming the 7.9 % average return generated by Austrian enterprises in other parts of the world.

5.3 Regional investment clusters in CESEE

Intraregional FDI within the CESEE region has been gaining momentum. This trend has been largely fueled by geographic proximity, as well as shared cultural and economic ties (chart 2). We can identify three main investment clusters:

5.3.1 CEE

Countries such as Czechia, Poland and Slovakia primarily invest in neighboring CESEE countries, with Czechia and Slovakia maintaining particularly strong bilateral investment ties. Poland has been following a more diversified strategy, extending its investments to Southeastern Europe, the Baltic states and other post-Soviet countries, among others. Hungary and Slovenia, by contrast, have been focusing more heavily on investments in the southern part of the region, particularly in the Western Balkans and Southeastern Europe.

5.3.2 Western Balkans

Although Bulgaria, Croatia and Slovenia are not part of the Western Balkans, they maintain strong investment ties with the region, largely due to historical and cultural connections. Slovenian investors have primarily targeted Serbia, and Bosnia and Herzegovina. Bulgaria has been focusing on Albania and, more broadly, Southeastern Europe (e.g., Romania). Croatia, meanwhile, has been channeling most of its investments into the CEE region, with a particular emphasis on Slovenia.

5.3.3 Southeastern Europe

Bulgaria, Romania and Croatia are closely interconnected within the region and have also benefited from Hungary’s role as a key investor. Hungary’s investment activity has been focused on Croatia, Romania and Bulgaria, with additional engagement in parts of the Western Balkans. Romania has been mainly investing in Bulgaria, Moldova and Serbia. Croatia, in turn, has directed most of its investments toward Bosnia and Herzegovina, while maintaining close bilateral ties with Slovenia.

6 Intragroup lending gains ground in Austrian FDI

Kujtim Avdiu ¹³ ,

Jochen Güntner ¹⁴ ,

Karin Mayr-Dorn ¹⁵ ,

Esther Segalla ¹⁶

6.1 Introduction

Intragroup loans are becoming an increasingly important financing tool for Austrian direct investors. Between 2012 and 2023, their volume doubled, reaching EUR 32.1 billion, equivalent to 12.6 % of Austria’s total outward FDI. This financing method supports capital allocation within groups and offers strategic advantages such as tax optimization, enhanced liquidity management and interest savings, e.g. by leveraging international interest rate differentials.

In the following analysis, we will focus on Germany, which is the primary host country for Austrian subsidiaries receiving intragroup loans. Austrian enterprises that hold majority stakes of 75 % or more in German subsidiaries are especially interesting, as they exert greater control over the financing and economic development of these subsidiaries. To better understand investor behavior, we define four categories based on enterprises’ access to intragroup financing and loans from German banks. These classifications allow for a more nuanced interpretation of the underlying economic dynamics.

6.2 Economic implications

Invested capital often fails to accurately reflect the economic activity of Austrian enterprises abroad, as funds are frequently channeled through special purpose entities that create little added value locally. Instead, profitability and employment are becoming more relevant metrics.

6.2.1 Return on equity

Chart 1 shows that Austrian enterprises operating through intragroup financing in Germany from 2008 to 2022 achieved significantly higher returns on equity (13 % on average, as much as 15 % when excluding bank loans) compared to enterprises without intragroup financing (only 3.9 %). This points to a more efficient allocation of capital and greater financial flexibility.

6.2.2 Employment

A similar pattern is evident in employment trends (chart 2). By 2022, 70.4 % of employees in Austrian outward FDI enterprises were employed in firms with intragroup financing, even though these firms accounted for only 46.8 % of the deployed equity. This indicates that such enterprises make a disproportionately large contribution to employment and business activity in Germany compared to their relatively small capital investment.

6.3 Empirical analysis

An empirical analysis reveals that intragroup lending is a key driver of Austrian enterprises’ activity in Germany. Enterprises with internal financing not only achieve significantly higher returns on equity but also employ a disproportionately large number of workers. Regression analyses further underscore a strong correlation between internal financing, profitability and employment, particularly among enterprises that do not rely on bank loans. These results suggest that intragroup lending enhances both operational efficiency and business activity abroad.

7 Methods, definitions and sources

This special issue presents the results of two survey waves of the Oesterreichische Nationalbank (OeNB) on Austrian direct investments abroad (outward FDI) and foreign direct investments in Austria (inward FDI) as of end-2022. The OeNB started in 1968 to compile data on cross-border equity interests on a regular basis. In 2006, it revised the questionnaire thoroughly after having made only minor changes in the 15 years previously. The key methodological changes it implemented in 2006 were (1) the valuation of listed stock corporations at market price, (2) a widening of the aggregate other capital, and (3) the exclusion of special purpose entities (SPEs) from the direct investment statistics (see 7.2 below). To further reduce the reporting burden, the OeNB started to increasingly use available statistical data or register data. Moreover, it raised the reporting threshold for transactions from a voting capital share of EUR 72,000 to EUR 100,000, which led to a statistical break in unit-based time series. This reporting threshold was raised to EUR 500,000 in January 2014.

In the reporting year 2008, the OeNB used the revised Austrian statistical classification of industries ÖNACE 2008 for the first time, and it backcast firm-level data. Data based on the former ÖNACE 2003 classification were available up to the reporting year 2012.

The OeNB prepared for the Europe-wide transition in fall 2014 to the new international provisions on drawing up the balance of payments as set out in the Balance of Payments and International Investment Position Manual, Sixth Edition (IMF, 2009; OECD, 2008) as follows: it already covered all investment (lending) between fellow enterprises (enterprises that are under the control or influence of the same immediate or indirect investor without one fellow enterprise controlling or influencing the other) for the first time in the reporting year 2010. Previously, only that investment between fellow enterprises could be covered in which the Austrian fellow enterprise was also captured as a direct investor (outward FDI) or as a direct investment enterprise (inward FDI). The direction of direct investment between fellow enterprises is determined by the extended directional principle (IMF, 2009, p. 107f.; OECD, 2008, p. 56f.), i.e. by the residency of the ultimate controlling parent. Intragroup claims of a resident lender ¹⁷ increase Austria’s outward FDI when the ultimate controlling parent is an Austrian group, whereas it reduces inward FDI if the ultimate controlling parent is a nonresident multinational corporation. Conversely, if a resident enterprise receives a loan from a fellow enterprise, inward FDI increases if the controlling parent is a nonresident and outward FDI decreases if the controlling parent is headquartered in Austria. The inclusion of lending between fellow enterprises substantially increased the gross volume of direct investment assets and liabilities, ¹⁸ whereas the impact on stocks of inward and outward FDI and on the ranking of origin and target countries was limited.

Since fall 2014, the usual directional breakdown of direct investment into inward and outward FDI has been complemented by a presentation on an asset and liability basis, in particular with respect to balance of payments statistics and the international investment position. According to the asset/liability principle, all direct investment assets (claims on nonresidents) and all direct investment liabilities (obligations to nonresidents) are recorded without reflecting the direction of influence – inward or outward – of the direct investor.

On its website, the OeNB provides a table mapping direct investment data from the directional principle to the asset/liability presentation. ¹⁹ The statistics on direct investment stocks are, however, still exclusively based on the (extended) directional principle determined by the investor’s residency.

7.1 Definitions

The Austrian definition of foreign direct investment is essentially in line with the concept used by the relevant international organizations, that is, the latest editions of the IMF’s Balance of Payments Manual and of the OECD Benchmark Definition of Foreign Direct Investment. Accordingly, Austrian direct investment abroad – outward direct investment – is understood to mean residents’ capital investment abroad made for the purpose of establishing and maintaining a long-term economic relationship with a foreign enterprise with the added intention of exercising a significant degree of influence on its management. In line with the international standards mentioned above, such intention is assumed where the direct investor holds a share of at least 10 % in the enterprise. The survey does not cover other types of cross-border transactions, e.g. pure cooperation and consultation agreements. The 10 % threshold helps distinguish direct investment from other types of long-term capital investment, such as portfolio investment, where the primary objective is profit.

According to these definitions, foreign real estate purchases and sales are also

part of FDI and need to be reported for the balance of payments, whereas the corresponding stock item in the international investment position is derived by accumulating the underlying flows. However, this publication and the underlying survey among enterprises explicitly exclude investment in real estate.

There are basically four different types of direct investment:

• Investment in existing or newly established enterprises in the form of cash contributions, setoffs of claims, noncash capital contributions or the transfer of rights;

• reinvestment of profits, i.e. full or partial retention rather than disbursement of the profit earned by the direct investment enterprise;

• loans and other allocations provided to enterprises by foreign investors directly or through other group enterprises to reinforce these companies’ resources (in addition to investors’ equity capital). In line with the directional principle, loans granted by subsidiaries to parent companies are classified as negative direct investment, which can occasionally lead to negative direct investment stocks. Investment (lending) between fellow enterprises (enterprises that are under the control or influence of the same immediate or indirect investor without one fellow enterprise controlling or influencing the other) is also covered. The direction of direct investment between fellow enterprises is determined by the residency of the ultimate controlling parent. If the latter is resident in Austria, all relevant transactions and positions are classified as outward direct investment, and vice versa.

• Nowadays, direct investment statistics not only capture intragroup loans, but also types of bonds. A corporate bond that is subscribed to exclusively by group enterprises has the same financing function as an intragroup loan and is therefore attributed to direct investment, to the “Other direct investment capital” subitem to be precise.

The distinction between equity and other capital, which is commonly used in international statistics, is drawn on the basis of the differentiation presented above.

7.2 Adjustment for special purpose entities (SPEs)

Worldwide integration, the removal of barriers to capital movements and the complexity of group structures have given rise to a discussion of the information value of traditional direct investment statistics. One of the key reasons for the distortions that some users criticize is the current coverage of foreign-controlled holding companies that have little or no market activity in the country in which they are residents but at the same time own substantial amounts of direct investment assets. According to existing guidelines, such holding companies qualify as inward and outward direct investors at the same time. Some multinational corporations have built up entire chains of holding companies, which from a critical point of view leads to double – or even multiple – counting of direct investment and moreover conceals the sources and targets of FDI. Another form of SPE is that of special purpose vehicles founded only to raise funds for the entire group in a specific country. A normal funding operation – borrowing or security issuance – abroad thus becomes a negative direct investment (loan extended by the affiliate to the parent company).

Whereas advocates of the existing definitions point out that these corporate structures are also relevant to the presentation of direct investment, critical researchers which are intent on capturing real economic developments have doubts about the usefulness of such statistics. To resolve this dilemma, international organizations encourage the presentation of SPEs in a separate item (OECD, 2008,

p. 186ff.). Eurostat and the ECB have adjusted their reporting obligations accordingly. However, the small number of resident SPEs in Austria has thwarted the publication of separate statistics – one with, one without SPEs – as simple subtraction would allow users of statistics to identify individual SPEs, which in turn would violate data protection laws. Therefore, the OeNB has decided to publish statistics that exclude SPEs.

Austria has long been host to many partly foreign-controlled holding companies that own subsidiaries abroad themselves as bridgeheads, especially in Central, Eastern and Southeastern Europe. The majority of these bridgeheads, though, undertake manufacturing activities in Austria, and until 2005, there were only very few, moderately sized shell companies. These holding companies did not really distort the direct investment statistics, except that they occasionally caused significant (e.g. regional) shifts as a result of corporate restructuring. But in 2005, SPEs were set up in Austria whose size made it necessary to change their recognition in statistics. Since then, a handful of SPEs with a corporate value of some EUR 50 billion at end-2016 that have virtually no employees in Austria and do not actively pursue business activities in the Austrian market have been explicitly excluded from the direct investment statistics (but not the direct investment survey). While these SPEs must be included in the data reported to Eurostat and the ECB, given the need to preserve bilateral symmetry and to calculate meaningful aggregates at the European level, their exclusion appears to be useful when using purely Austrian statistics.

7.3 Adjustment of inward FDI data for the location of the ultimate parent company

In classifying direct investment by origin, the problem arises that the direct investor is not necessarily the actual decision maker. Consider, for example, a German company acquiring a stake in an Austrian enterprise via a holding company located in Switzerland. To take account of this distortion, i.e. to identify the country of origin of the ultimate investor (in other words, the location of the parent company), additional information has been collected since 1982. This method has proved suitable in Austria and is now recommended by international organizations ²⁰ for satellite statistics adjusted for SPEs. Reporting for European aggregates, however, still requires the identification and reporting of the direct investor’s location.

The adjustment for the ultimate investor may result in the seeming paradox that inward FDI may well be attributed to Austrian investors. In line with international practice, such round tripping is to be shown under both inward and outward FDI. Until the review year 2002, however, Austria adjusted its statistics for the parent company location, which resulted in different total inward direct investment figures, depending on whether they were based on the parent company principle or on the direct owner principle. From 2006, Austrian inward direct investment by Austrian companies has been explicitly shown in the statistics. ²¹

7.4 Structure of tables

The restructuring of the survey in 2006 implied that the set of tables was also extended and slightly restructured. The tables section in this publication begins with a presentation of key figures in time series and the development over time of the total value of direct investment as well as employment at direct investment enterprises by countries and by industries. In line with international standards applicable to direct investment statistics, the breakdown by industry is based on the activity of the affiliate, not the parent company.

Tables 6 and 7 present the main results not just by home and host countries and industries, but also broken down by provinces, size, duration of investment, investment at establishment, and type of investment ²² or investor ²³ . This is complemented by the breakdown by industry or resident affiliates and the direct investor’s legal form. The same type of breakdown is applied in tables 8 through 11, which show enterprises’ income statements and some important criteria of economic activity (imports and exports, royalty and management fee income).

The subsequent set of tables breaks capital and employment down by regions and industries. For confidentiality reasons, the breakdown by countries can show only rough attributions to economic sectors (table 12), and the breakdown by industries (table 13) can be made with only a limited regional attribution.

Tables 14 and 15 deal with the issue of foreign control, examining the type of direct investor in the case of outward FDI and the type of investment (minority or majority interest) in the case of inward FDI. Table 16 provides information about the motives of direct investors. The final set of tables, tables 17 and 18, analyze the significance of indirect investment as illustrated by employment.

In line with the established practice, the results of the surveys on outward and inward FDI are published together. The tables on outward and inward FDI were given an identical structure wherever the data allowed for such a presentation. This makes it possible to obtain a comprehensive picture from a direct comparison of outward and inward FDI data for Austria.

Adjusting the balance of payments statistics and the international investment position to the provisions set out in the BPM6 has not had a direct impact on the presentation of direct investment stocks. It is, however, true that the results from backcasting the balance of payments and international investment position from 2006 to 2014 cannot be considered in this publication. Any discrepancies between this publication and the current statistics published on the OeNB website ²⁴ are primarily traceable to the inclusion of several large loans between fellow enterprises from 2006 to 2010 and the revision of the time of recording of a few large investments.

7.5 Glossary

Direct investment

According to the Balance of Payments Manual of the IMF (2009, p. 100), direct investment is a category of cross-border investment that reflects an investor’s objective to exercise a significant degree of influence on the management of an enterprise that is resident in an economy other than that in which the investor is located. By international convention, a holding of 10 % of voting power is considered the threshold for the exercise of control.

The term direct investment also refers to the relationship between a direct investor and a direct investment enterprise. The number of direct investments is larger than the number of direct investors and of direct investment enterprises, as a given investor can hold investments in several direct investment enterprises, and as several investors can hold investments in a given direct investment enterprise.

Direct investment enterprise

An enterprise in which one or more direct investors hold a stake. In the case of outward direct investment, the (Austrian) direct investment enterprise is located abroad; in the case of inward direct investment, the (foreign) direct investment enterprise is located in Austria.

Direct investor

One or more individuals or legal entities that own a share of a direct investment enterprise. The direct investor must be resident (domiciled) in a country other than that in which the direct investment enterprise is located. From an Austrian perspective, direct investors engaging in outward direct investment are located in Austria; and those engaging in inward direct investment are located abroad.

Equity

In the case of unlisted companies, the liability side of affiliate enterprises’ balance sheets is used to determine equity figures. The ECB and the OECD refer to this approach as “own funds at book value,” which is used whenever market capitalization is not available from a stock exchange. Equity is the sum total of nominal capital, reserves, profit or loss brought forward and the profit or loss of the current year. The equity of listed stock corporations corresponds to their market value. The ECB and Eurostat refer to this valuation approach as “market valuation”.

Foreign Affiliates Statistics (FATS) ²⁵

Regulation (EC) No 716/2007 of the European Parliament and of the Council of 20 June 2007 on Community Statistics on the structure and activity of foreign affiliates provided a framework for compiling foreign affiliate statistics (FATS), which are closely linked to direct investment statistics. By analogy to direct investment, the framework distinguishes between inward FATS (activities of resident foreign-controlled enterprises) and outward FATS (activities of resident-controlled enterprises abroad). The key differences between the FATS and the direct investment statistics are that FATS capture controlled enterprises only (a direct investment of over 50 %) and the fact that FATS data are not weighted with ownership shares. The activity of a controlled enterprise is fully attributed to the majority owner. The Austrian FATS have been compiled by Statistics Austria in cooperation with the OeNB since the reporting year 2007.

Indirect investments

Investment of a direct investment enterprise (first-tier affiliate) in another enterprise (second-tier affiliate). Starting with the 2006 survey and in anticipation of the FATS statistics, instead of compiling data on all indirect second-tier investments of more than 10 %, the survey seeks to collect data on all indirect investments controlled by the direct investor (over 50 %), independently of the length of the ownership chain.

Note: The OeNB’s survey compiles outward direct investment data on all indirect investments abroad and inward direct investment data only on indirect investments in Austrian enterprises.

Inward direct investment

Holding of a foreign direct investor in the equity of an enterprise resident in Austria that gives the direct investor more than 10 % of the voting power in that enterprise.

Market value

By definition, market value is the amount a buyer would be willing to pay and a seller willing to accept. In the case of listed stock corporations, market value is the capitalized value of stocks at the reference date. For the vast majority of companies, book value is given as an approximation where actual market values are not available.

Other capital

All types of intragroup finance excluding own funds. This type of finance used to be limited to long-term intragroup lending but was expanded over the years and now also includes financial relationships between group enterprises in which there are no direct investments (fellow enterprises).

The direction of direct investment between fellow enterprises is determined by the residency of the ultimate controlling parent. If the latter is resident in Austria, all relevant transactions and positions are classified as inward direct investment, and vice versa. Corporate bonds that have been subscribed to exclusively by group enterprises are likewise classified as other direct investment capital.

Such financing excludes intragroup settlement accounts and lending between connected banks, provided this lending is not of an equity nature or does not count as subordinate liable capital.

Outward direct investment

Holding of an Austrian direct investor in the equity of an enterprise established abroad that confers more than 10 % of the voting power in that enterprise on the direct investor.

Payroll employment

The average number of a direct investment enterprise’s employees in a given calendar year weighted (i.e. multiplied) by the direct investor’s percentage ownership of the direct investment enterprise’s nominal capital. See the statistics on foreign affiliates released by Statistics Austria (foreign affiliates statistics – FATS) for figures on unweighted employment in foreign-controlled enterprises (including those under direct control).

Regional breakdown

• EA-18: Belgium, Germany, Estonia, Ireland, Greece, Spain, France (including Monaco and overseas departments), Italy (excluding San Marino, the Vatican), Cyprus, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Portugal, Slovenia, Slovakia, Finland; Austria is excluded.

• EU-13: Belgium, Germany, Greece, Spain, France (including Monaco and overseas departments), Ireland, Italy (excluding San Marino and the Vatican), Luxembourg, the Netherlands, Portugal, Finland, Denmark, Sweden; Austria is excluded.

• EU-27: EU-14 + CEEC-5 + Bulgaria, Estonia, Croatia, Cyprus, Latvia, Lithuania, Malta, Romania; Austria is excluded.

• Potential EU candidates: Albania, Bosnia and Herzegovina, Kosovo, Montenegro, North Macedonia, Serbia, Turkiye.

• Europe: includes European CIS countries.

• CEEC-5: Czechia, Hungary, Poland, Slovenia, Slovakia.

• CESEE: CEEC-5 + Albania, Belarus, Bosnia and Herzegovina, Bulgaria, Croatia, Estonia, Kosovo, Latvia, Lithuania, Moldova, Montenegro, North Macedonia, Romania, Russia, Serbia, Ukraine.

• OECD: EU-14 + OECD overseas countries + Czechia, Estonia, Hungary, Iceland, Norway, Poland, Slovakia, Slovenia, Switzerland, Turkiye.

• OECD overseas countries: Australia, Canada, Chile, Israel, Japan, Mexico, New Zealand, South Korea, USA (including Puerto Rico).

Special purpose entity (SPE)

This broadly defined term denotes corporations established within groups for unspecified (e.g. tax or financing) purposes. Their presentation in the direct investment statistics materially influences the Austrian FDI data. Direct investment by Austrian SPEs abroad and by foreign investors in Austrian SPEs is therefore not considered in this publication.

SPEs are defined as holdings that are wholly owned by nonresidents, have negligible employment and no market production, and the vast majority of whose assets consist of investments in nonresident enterprises or affiliates abroad.

Total value

Equity plus other capital. Since the review year 2006, valuation has been at market price, meaning that listed stock corporations are valued at market prices and all other enterprises at book value.

Type of direct investment

The breakdown of inward direct investment distinguishes between minority and majority interests, reflecting individual investment rather than foreign control: In practice, several minority interests frequently combine to make up foreign control.

Type of investor

From the reporting year 2006, Austria’s outward direct investment statistics distinguish between outward direct investment undertaken by Austrian or Austrian-controlled investors, and such investment undertaken by foreign-controlled investors resident in Austria.

Foreign control means that one or more foreign direct investors together hold the majority of the voting power. A direct investment enterprise is considered Austrian controlled if direct investors hold 50 % of the voting power or if a foreign majority is the result of float ownership. Foreign-controlled investors play an especially significant role in Austria, serving as bridgeheads or regional headquarters. They are not to be confused with special purpose entities (see the respective entry), as, unlike SPEs, they undertake market activities or exercise management functions in Austria. One indicator is the classification according to NACE rev. 2, where holding companies fall into the group 64.2, whereas units classified under group 70.1 exercise operational control and day-to-day management.

7.6 Classification of industries

Direct investment companies (or direct investors) have been classified to the respective industries in line with the latest revision of the Austrian statistical classification of industries, i.e. ÖNACE 2008 (Statistics Austria, 2008) since the reporting year 2008. The thorough reclassification reflects the ongoing economic change and was implemented in an internationally harmonized process. ÖNACE 2008 corresponds to the NACE Rev. 2 at the European level and to the UN’s ISIC Rev. 4. The legal basis for the reclassification is Regulation (EC) No 1893/2006 of the European Parliament and of the Council, which became effective on January 1, 2008. The sectoral break-down of this direct investment statistic at the two-digit level is presented below.

References

IMF. 2009. Balance of Payments and International Investment Position Manual. Sixth Edition (BPM6).

OECD. 2008. Benchmark Definition of Foreign Direct Investment. Fourth Edition (BD4).

Statistics Austria. 2008. Systematik der Wirtschaftstätigkeiten. ÖNACE 2008. Volume 1 and 2

8 Annex

The annex, which includes tables, maps and a figure, can be found in section 8 of the PDF version of this report.