Section: Research Policy & Development

The R&I Observatory country report 2017 provides a brief analysis of the R&I system covering the economic context, main actors, funding trends & human resources, policies to address R&I challenges, and R&I in national and regional smart specialisation strategies. Data is from Eurostat, unless otherwise referenced and is correct as at January 2018. Data used from other international sources is also correct to that date. The report provides a state-of-play and analysis of the national level R&I system and its challenges, to support the European Semester.

RIO is the Research and Innovation Observatory of the European Commission's Joint Research Centre,

The main challenges for R&I policy-making in Austria in a nutshell are:

• Improve the relationship between innovation input and innovation output: Although Austria has the second highest GERD in % of GDP ratio in the EU, the aspired structural change of the economy towards a more knowledge-intensive, innovative and high-tech oriented economy progresses only slowly, which is partially caused by Austria’s industrial structure, administrative and regulatory barriers, low entrepreneurship education and promotion, and applied R&D programmes which are still very engineering-driven but lacking innovation orientation. The ongoing investment in upgrading the Austrian broadband network is an important step in the right direction.
• Further increase equity capital supply for start-ups and scale-ups: Whereas access to finance is not a short-term concern for Austrian SMEs in general, supply of equity finance for young companies is still scarce. The situation is improving though. The start-up package announced in 2016 represents the first main step towards implementation of the "Gründerland" strategy from 2015. One of the core points of the package is the reduction of auxiliary salary costs for three-years to relieve innovative start-ups from the high social contributions to their employees. There are indications that the strong increase in public Venture Capital (VC) is starting to leverage private equity, especially from foreign sources, while private VC contributions generating from Austria are still very low.
• Increase funding for competitive basic research: The national university development plan lists strengthening of basic research as a systemic goal. The ‘research billion’ promised, among other issues, additional budget for basic research to the Austrian Science Fund (FWF). However, it is not clear, if the FWF’s focus on supporting projects of single applicants in person is sufficient to substantially contribute to the expected profiling of universities. If the promised research billion is not realized, the current Austrian funding mix risks to overemphasis applied research funding at the expense of basic research.
• Reform of the Financing of the Higher Education System: To improve the financial situation for universities, the student-professor ratios and to increase financial transparency, the introduction of a study-placed financing system, which includes access restrictions for certain studies, has been planned since a couple of years. In July 2017, a significant budget increase for the universities has been adopted by the national assembly to make the transition to the new study-placed financing system financially feasible, but the bill on the actual study place financing system still lacks approval by the parliament. The change of the financing system alone, however, can only be a basis for an improved profiling of Austrian universities, which is severely aggravated by the structural composition of the Austrian higher education system.

Authors: Schuch, K., Klaus Schuch & Giuseppina Testa

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Tags: Austria, research and innovation policy