International Headquarters Vienna: Economic Importance and Future Potential
A recently published study by the economic research institute WIFO on behalf of the Austrian Foreign Ministry illustrates the significant financial impact of international organizations in Austria.
Alexander Schallenberg (l.) and Gabriel Felbermayr (r.) jointly presented the results of the study on Vienna as an international hub. / Picture: © BMEIA Bundesministerium für Europa, Integration und Äußeres / Flickr Attribution 2.0 Generic (CC BY 2.0 DEED)
These organizations, which include important institutions such as the United Nations (UN), the Organization of the Petroleum Exporting Countries (OPEC), and the Organization for Security and Co-operation in Europe (OSCE), play a central role in the Austrian economy. The report shows that the official seat in Austria secures almost 20,000 jobs and generates an annual value-added effect of around 1.7 billion euros.
Foreign Minister Alexander Schallenberg emphasized the political and economic importance of these organizations. He pointed out that the positive economic effects have increased by 4% compared to the previous study from 2020. This is particularly evident in Vienna, which, as the main location for international organizations, accounts for 67% of the total value-added effect. Lower Austria and Upper Austria also benefit considerably, with Lower Austria accounting for around 14.5% of the economic benefit.
The study also emphasizes that these international organizations significantly contribute to compliance with international law and the protecting of human rights. At a time when Austria is surrounded by geopolitical tensions and trouble spots, this international cooperation is invaluable. Schallenberg emphasized that for Austria, a medium-sized state amid a “ring of fire of crises”, multilateralism is not just a choice, but an obligation.
Gabriel Felbermayr, head of WIFO, added that the actual positive effects of these organizations are even greater than stated in the study. Although a considerable part of the added value remains untaxed due to tax exemptions, the international organizations contribute around 790 million euros to the Austrian state budget through other levies. In addition, the number of conference days in Vienna, which also contribute to value creation, has almost doubled - from 10,800 days in 2019 to 18,000 days in 2023.
In addition to the direct economic effects, these organizations also create indirect benefits. For example, 18 international schools in Austria teach around 3,000 children of expatriates. This further contributes to Vienna's attractiveness as an official residence, as it offers high-quality education for the families of international professionals.
Schallenberg pointed out that international competition to attract such organizations is becoming increasingly aggressive. Cities such as Amsterdam, Paris, and Copenhagen as well as Dubai and Abu Dhabi are stepping up their efforts to position themselves as attractive locations for international organizations. Austria must therefore continue to invest in its infrastructure and framework conditions to remain competitive.
The Austrian Registered Office Act, which came into force in 2021, represents an important step in this direction. It provides a clear legal framework for the establishment of new organizations and strengthens Austria's position in global competition. The study shows that the positive economic effects far outweigh the costs associated with relocation, such as security measures and tax concessions. This means that Austria remains an attractive location for international organizations and benefits from the associated economic and political advantages in the long term.