austria 2020 the impact of medium-term global trends on the austrian economy
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AUSTRIA 2020 The impact of medium-term global trends on the Austrian economy. E. Christie, J. Francois, M. Holzner, S. Leitner, O. Pindyuk FIW Research Reports: http://www.fiw.ac.at. Contents. Overview of Austria’s Current Economic Structure Overview of Macroeconomic Projections - PowerPoint PPT PresentationTRANSCRIPT
11th FIW Workshop, 8th of April 2010, Vienna
www.wiiw.ac.at
AUSTRIA 2020
The impact of medium-term global trends
on the Austrian economy
E. Christie, J. Francois, M. Holzner,
S. Leitner, O. Pindyuk
FIW Research Reports: http://www.fiw.ac.at
2
Contents
Overview of Austria’s Current Economic Structure Overview of Macroeconomic Projections Structural Change in Austria Household Inequality in Austria
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Structure of the Austrian economy, 2008
0
2
4
6
8
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14
16
18
20
othe
r bu
sine
ss s
ervi
ces
othe
r se
rvic
es
trad
e
cons
truc
tion
tran
spor
t
othe
r m
achi
nery
and
equ
ipm
ent
proc
esse
d fo
ods
rec
and
othe
r co
nsum
er s
ervs
chem
ical
s ru
bber
pla
stic
s
utili
ties
prim
ary
pape
r an
d pu
blis
hing
com
mun
icat
ions
fabr
icat
ed m
etal
s
insu
ranc
e
non-
met
allic
min
eral
s
mot
or v
ehic
les
light
man
ufac
ture
s
lum
ber
met
als
elec
tric
al m
achi
nery
othe
r fin
ance
text
iles
othe
r tr
ansp
ort
equi
pmen
t
min
ing
clot
hing
leat
her
petr
oche
mic
als
Value added
Exports
Imports
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Coefficients of correlation between Austria and other regions
Value added Exports Imports
Germany 0.96 0.86 0.86
EU 13 0.99 0.89 0.86
EU 12 0.96 0.81 0.79
EEA 0.93 0.58 0.83
NAFTA 0.85 0.85 0.72
Other OECD 0.90 0.74 0.64
China 0.61 0.33 0.58
Brazil 0.86 0.47 0.76
Latin America 0.79 0.15 0.76
India 0.46 0.48 0.34
Russia 0.78 0.11 0.65
ASEAN 0.73 0.37 0.61
Middle East and North Africa 0.64 0.03 0.78
Sub-Saharan Africa 0.63 0.02 0.77
Rest of World 0.69 0.24 0.62
Source: CGE projection-based estimates
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Geographical structure of Austrian trade in 2008, %
Exports Imports
Germany 27.3 32.9
EU 13 26.0 27.7
EU 12 14.2 12.1
EEA 5.4 3.6
Europe 72.9 76.3
NAFTA 6.3 5.5
Other OECD 2.3 2.0
China 2.8 3.1
Brazil 0.6 0.5
Latin America 1.0 0.8
India 0.6 0.4
Russia 2.0 1.8
ASEAN 2.9 3.1
Middle East and North Africa 2.7 2.4
Sub-Saharan Africa 1.2 0.8
Rest of World 4.7 3.4
Source: CGE projection-based estimates
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Model
Multi-region CGE model with imperfect competition Basic database is built from the GTAP7 database
(benchmarked to 2004) 32 sectors, 16 regions Exogenous variables: GDP, population, skilled and
unskilled labor, energy prices, TFP in primary food
production sector
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Regional Aggregation Scheme
GDP 2008, EUR bnReal annual average growth rate, 2008-2020
Austria 283 1.46
Germany 2,509 1.04
EU 13 8,446 1.55
EU 12 1,321 3.12
EEA 662 1.29
NAFTA 11,631 2.10
Other OECD 4,768 2.07
China 3,103 9.33
Brazil 1,074 3.26
Latin America 1,801 3.49
India 824 7.51
Russia 1,145 2.92
ASEAN 863 5.10
Middle East and North Africa 1,485 4.45
Sub-Saharan Africa 678 4.98
Rest of World 1,014 10.26
source: IMF WEO, October 2009 (with projection through 2020).
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Regional Shares of Global GDP: 2008 & 2020
6.0 4.5
20.3
16.2
3.2
3.1
28.0
23.9
11.5
9.7
7.5
14.5
4.3
4.3
2.0
3.1
2.8
2.6
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2008 2020
Rest of World
Sub-SaharanAfricaMiddle East andNorth AfricaASEAN
Russia
India
Latin America
Brazil
China
Other OECD
NAFTA
EEA
EU 12
EU 13
Germany
Austria
Source: CGE projection-based estimates
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Population and labor force growth Population Skilled labor Unskilled labor
Austria 4.7 22.7 -6.8
Germany -0.8 7.4 -8.9EU 13 6.8 25.3 -11.6
EU 12 -1.1 21.5 -12.2
EEA 1.2 1.2 1.2
NAFTA 10.0 10.0 10.0
Other OECD 4.9 4.9 4.9
China 6.2 6.2 6.2
Brazil 14.0 14.0 14.0
Latin America 15.4 15.4 15.4
India 16.8 16.8 16.8
Russia -5.8 -5.8 -5.8
ASEAN 8.7 8.7 8.7Middle East and North Africa 23.9 23.9 23.9
Sub-Saharan Africa 29.8 29.8 29.8
Rest of World 10.0 10.0 10.0
source: IMF WEO, Eurostat
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Energy price trends in the 2008-2020 baseline
Benchmark prices
2004 2008/9 2020
Crude oil, average €/bbl 30.4 41.0 85.0
Natural gas, average €/mmbtu 4.1 4.5 6.0
Source: World Bank Pink Sheets and IEA, and industry projections.
Cumulative increases in physical capital and TFP: 2008-2020
TFP, change Physical capital, % change
Austria 3.14 28.76
Germany 4.55 26.73
EU13 5.20 32.87
EU12 20.18 47.71
Source: CGE projection-based estimates
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Regional Shares of Global Output by Gross Value: 2008 & 2020
Source: CGE projection-based estimates
1.9 1.26.1 4.9 4.7 2.0
8.7 6.2 6.5 4.78.4 7.1 5.1 4.0
9.96.9
24.320.9 19.6
9.8
17.9
13.5
22.2
16.8
27.624.6
19.716.4
14.3
11.8
20.3
18.5
8.5
4.4
21.5
16.7
22.1
17.3
30.3
29.3
31.6
27.9
5.5
4.6
10.5
9.3
6.0
3.2
14.4
11.5
11.1
9.0
13.3
12.5
13.3
11.6
15.9
23.4
6.1
9.7
26.6
42.4
13.6
24.6
10.5
19.4
3.5
5.97.2
11.9
0%
20%
40%
60%
80%
100%
2008 2020 2008 2020 2008 2020 2008 2020 2008 2020 2008 2020 2008 2020
primary sectors processed foods textiles, clothing,leather
metals andmachinery
othermanufactures
businessservices
other services
Rest of World
Sub-Saharan Africa
Middle East and NorthAfricaASEAN
Russia
India
Latin America
Brazil
China
Other OECD
NAFTA
EEA
EU 12
EU 13
Germany
Austria
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Regional Shares of Global Exports by Value: 2008 & 2020
Source: CGE projection-based estimates
1.1 0.8
7.1 6.33.7 1.8
11.4 8.9 9.0 7.4 7.1 6.6 5.3 4.510.4 8.7
35.232.2
16.9
8.5
19.7
16.0
29.825.2
42.037.5
28.723.2
14.513.0
10.9
10.2
4.1
2.2
14.7
12.0
13.8
11.7
17.7
14.2
17.9
14.6
1.21.7
3.04.5
35.0
47.8
10.3
16.7
6.8
11.4
3.7
9.3 9.9
18.4
0%
20%
40%
60%
80%
100%
2008 2020 2008 2020 2008 2020 2008 2020 2008 2020 2008 2020 2008 2020
primarysectors
processedfoods
textiles,clothing,leather
metals andmachinery
othermanufactures
businessservices
other services
Rest of World
Sub-Saharan Africa
Middle East and NorthAfricaASEAN
Russia
India
Latin America
Brazil
China
Other OECD
NAFTA
EEA
EU 12
EU 13
Germany
Austria
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Regional Shares of Global Imports by Value: 2008 & 2020
Source: CGE projection-based estimates
5.6 3.36.7 5.8 7.4 7.4 7.3 5.9 7.0 5.2
9.2 7.9 9.1 8.0
19.5
14.3
29.626.0 25.2 25.0 22.3
18.6
27.1
21.4
35.933.0
27.624.2
14.9
10.1
13.2
12.8
24.422.4
20.0
17.7
18.9
16.0
13.815.7
14.9
15.7
11.1
15.9
4.7
5.0
8.58.5
9.5
12.6
7.7
11.3
3.82.6
7.9
8.9
0%
20%
40%
60%
80%
100%
2008 2020 2008 2020 2008 2020 2008 2020 2008 2020 2008 2020 2008 2020
primary sectors processedfoods
textiles,clothing,leather
metals andmachinery
othermanufactures
businessservices
other services
Rest of World
Sub-SaharanAfricaMiddle East andNorth AfricaASEAN
Russia
India
Latin America
Brazil
China
Other OECD
NAFTA
EEA
EU 12
EU 13
Germany
Austria
14
Cumulative % increases in real global commodity prices: 2008-2020 primary 1.90 light manufactures -11.35
coal 216.42 chemicals rubber plastics 6.98
oil 107.42 petrochemicals 85.73
gas 30.02 electrical machinery -11.84
mining 182.81 other machinery and equipment -2.48
processed foods -2.73 utilities 14.03
textiles -11.00 construction 0.95
clothing -19.02 trade -17.72
leather -12.07 transport 6.33
lumber -4.99 communications -14.88
paper and publishing -2.02 other finance -10.95
metals 19.88 insurance -7.89
fabricated metals 2.68 other business services -11.11
nonmetallic minerals 15.73 rec and other consumer servs -7.20
motor vehicles -1.34 other Services -6.83
other transport equipment -2.89
Source: World Bank Pink Sheets and IEA, and industry projections (for energy), and CGE model projections (for other).
15
Changes in CAB, annual position,
EUR mn, 2020 relative to 2008
Source: CGE projection-based estimates
Austria -4,142
Germany -6,819
Other EU13 -157
EU12 -27,918
Other EEA 15,906
NAFTA -314,000
Other OECD -52,847
China 300,493
Brazil 10,063
Latin America 9,480
India -10,312
Russia 127,556
ASEAN 83,012
Middle East, North Africa 155,236
Sub-Saharan Africa 16,256
Other non-OECD -14,450
16
Change in the real output, value of exports and imports in
Austria over 2008-2020, % Output Exports Imports
primary 21.7 65.1 12.6
mining 37.0 408.7 283.1
processed foods 13.6 10.8 25.7
textiles -21.4 -32.7 32.3
clothing -29.1 -43.7 53.4
leather -21.7 -25.3 33.4
metals 127.9 179.7 39.4
non-metallic minerals 33.6 88.6 61.4
motor vehicles 18.3 19.0 23.9
light manufactures 5.7 -6.2 64.5
chemicals rubber plastics 45.9 69.2 22.9
Output Exports Imports
petrochemicals 13.5 169.0 129.8
electrical machinery -25.2 -24.7 21.0
utilities 32.2 106.7 20.4
construction 22.1 25.8 61.1
trade 14.0 3.3 64.4
transport 30.6 43.9 42.8
communications 12.8 0.2 46.8
other finance 9.7 4.4 24.1
insurance 15.5 8.5 24.1
other business services 11.4 6.6 28.7
Source: CGE projection-based estimates.
17
Net exports, %GDP
-5
-4
-3
-2
-1
0
1
2
3
4
5
6
7
tran
spor
t
othe
r m
achi
nery
and
equ
ipm
ent
proc
esse
d fo
ods
lum
ber
pape
r an
d pu
blis
hing
non-
met
allic
min
eral
s
insu
ranc
e
met
als
othe
r se
rvic
es
light
man
ufac
ture
s
trad
e
mot
or v
ehic
les
othe
r tr
ansp
ort e
quip
men
t
cons
truc
tion
com
mun
icat
ions
fabr
icat
ed m
etal
s
coal
gas
min
ing
text
iles
leat
her
rec
and
othe
r co
nsum
er s
ervs
othe
r fin
ance
utili
ties
chem
ical
s ru
bber
pla
stic
s
prim
ary oil
clot
hing
petr
oche
mic
als
elec
tric
al m
achi
nery
othe
r bu
sine
ss s
ervi
ces
NX 2008
NX 2020
Source: CGE projection-based estimates
18
Regional Shares of Austrian Exports by value: 1992, 2008, & 2020
Source: CGE projection-based estimates
40.4
27.324.1
29.1
26.0
23.7
7.0
14.2
14.3
6.7
5.4
5.6
2.9 4.77.5
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1992 2008 2020
Rest of World
Sub-Saharan Africa
Middle East and NorthAfricaASEAN
Russia
India
Latin America
Brazil
China
Other OECD
NAFTA
EEA
EU 12
EU 13
Germany
Europe 83.2%
Europe 72.9%
Europe 67.8%
19
48.0
32.928.9
26.7
27.7
24.5
3.8
12.1
13.0
4.4
3.6
2.4
1.2
3.1
6.7
1.4 3.47.1
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1992 2008 2020
Rest of World
Sub-Saharan Africa
Middle East and NorthAfricaASEAN
Russia
India
Latin America
Brazil
China
Other OECD
NAFTA
EEA
EU 12
EU 13
Germany
Regional Shares of Austrian Imports by value: 1992, 2008, & 2020
Source: CGE projection-based estimates
Europe 83.0%
Europe 76.3% Europe
68.8%
20
Household Inequality in Austria
Stylised fact: Austria a winner of internationalisation
but average wage earner did not participate in gains Literature: only few studies on distributional trade
effects in Austria & no multi-country CGE analysis Assumption 2020: unskilled labour -7%, skilled
labour +23% (CEDEFOP), population growth 5% GTAP input 2020: factor income for unskilled +11%,
skilled +18%, capital +22% Mapping exercise: regression based assignment of
inactive to labour force using EU-SILC micro data
21
Mapping exercise results
Income shares: skilled vs. unskilled labour income
ratio increases from 37/63 to 48/52 by 2020 Average income: skilled -5%, unskilled +33% due to
changes in the number of persons Gini coefficient: Initial 27.5, changes in skilled vs
unskilled increases to 28.3, higher capital income
increases to 28.5, below average increase of transfers
reduces inequality only to 28.1 in 2020 Policy: Compensation of groups being relatively
worse off, increasing capital and high income taxation
22
AUSTRIA 2020
The impact of medium-term global trends
on the Austrian economy
E. Christie, J. Francois, M. Holzner,
S. Leitner, O. Pindyuk
FIW Research Reports: http://www.fiw.ac.at