Is it the strong purchasing power of enterprises based in Austria, supported by its "hard" currency and economic stability? Is it the proximity and connections to the high-growth Eastern European markets? Or is it Austria's European Union membership that is attracting foreign investment?

According to Austria's Institute for Economic Research (WIFO), all of the above factors contributed to another record year for net foreign investment here in 1996. The Austrian National Bank reports that foreign investors directed ATS 40.2 billion ($3.4 billion) to the nation's economy last year, around ATS 22 billion ($ 1.9 billion) more than in 1995. 90 percent of this investment came from EU states - with Germany, the Netherlands and Great Britain the leading contributors by far.

The National Bank's calculations, however, do not include foreign takeovers of or equity investments in Austrian firms, nor additional investments by firms with operations already in Austria. The Germans lead the way in this category as well, followed by investors from the USA, Sweden, and the Netherlands.

Key transactions included the combination between Baxter, a U.S.-based global healthcare organization, with Austria's Immuno biotechnology concern, and German acquisitions and equity investments involving food retailer Billa, Bank Austria, the medical wholesaler VAMED and aluminium manufacturer Alu-Guss.

At the same time, several leading foreign concerns with existing operations in Austria - already convinced of the nation's numerous advantages - undertook additional multi-billion schilling investments in 1996. These included Opel Austria's ATS 4.9 billion ($4.1 billion) investment in a new engine facility, Siemens' ATS 5.0 billion upgrade of its semiconductor center of excellence in Villach, and ATS 2 billion ($1.7 billion) spent by the Norwegian pharmaceutical firm Nycomed to expand its Linz facility.

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