Economic Strategy

Styria 2020

Growth through Innovation

Department 14 – Economic Affairs and Innovation

 Economy Strategy | Styria 2020

Department 14 – Economic Affairs and Innovation

Nikolaiplatz 3, A-8020 Graz
Tel.: +43 3169 877-4230 | Fax: +43 316 877-3129
[email protected], www.wirtschaft.steiermark.at
Responsible for the content:
Head of Department Dr. Karlheinz Kohrgruber
Dipl.-Ing. Stephan Pech

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 Economy Strategy | Styria 2020

Introduction
During the last period of government, the department of commerce developed the economic
region of Styria through the Economic Strategy "Innovation as standard." The aim is to support
businesses through measures that are able to transform their innovative projects into market-
able products and services. The development of the economic province is carried out with the
close cooperation of Chambers of Commerce, Industry groups, Employee federations and
trade unions. Through the interaction of large industrial companies and numerous Styrian
small and medium enterprises, Styria rose up to become the European vice-champion with a
regional research and development rate of 4.3%; further through the combined selected and
effective actions of the partners it was possible to overcome the financial and economic crisis.

The new Economic Strategy: Styria 2020, “Growth through Innovation” now lies ahead. Its key
milestones concentrate active regional development under three main themes (Mobility,
Eco-Tech and Health-Tech) and the alignment of funding programmes to promote proactive
regional development. In addition, private equity will be increasingly mobilized and a focus will
set on the development of flexible funding instruments.

The strategic goals are grouped into five core strategies and supported through three per-
formance measures. The five core strategies comprise of: Regional Development and Man-
agement, Internationalization of the Region and Companies, Skills Development and Human
Potential, Entrepreneurship and Growth of Business Start-ups, as well as Innovation and R&D.
The performance measures are Raising Awareness, Development, and Funding and Finance. By
implementing these core strategies through these performance functions, Styria will become a
European benchmark for a knowledge-based manufacturing economy.

Within the province of Styria, the core competences and regional advantages are already
available to put the three main themes in place. These include, for example, all the engineering
disciplines taught at the Universities of Graz and Leoben, but equally all sectors of the creative
industries that have an interdisciplinary role in relationship to the innovation capacity of busi-
nesses.

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A particular driver for growth, identified in the course of the research and studies that form
the basis for this strategy, are the some 2,200 manufacturing and closely related service busi-
nesses located in the province of Styria. They are thus the primary target group for an aggres-
sive regional economic policy. Through these 2,200 companies, mainly consisting of innova-
tion-oriented small and medium-sized enterprises, up to 120,000 people are employed that
are of essential importance for a high-growth innovative economic region.

Only the people who stand behind each of the more than 55,000 Styrian companies can be
open minded and courageous enough to achieve new successes, generate new value, and
ultimately secure current jobs and future employment growth for Styria. Together with my
team, Department 14 – Economic Affairs and Innovation, in the Ministry for Economy as well
as the Styrian Economic Development Agency, I wish to encourage and support them.

Dr. Christian Buchmann

Provincial Minister for Economy

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Contents

Introduction Provincial Minister for Economy Dr. Christian Buchmann

1 Styria: A Region with Great Potential ............................................................................ 5

2 The Economic Policy Framework................................................................................... 7
2.1 Economic Environment .................................................................................................. 7
2.2 A New Reality and Rule Set ........................................................................................... 9
2.3 New Economic Structures ............................................................................................ 11
2.4 A Sound Basis for the Active Management of Change ................................................ 13
2.5 The Strategic Levers for Economic Development ........................................................ 15
3 Styria 2020: Vision for the Economic Region................................................................ 19
4 Styria 2020: Goals, Strategies and Axes of Change ....................................................... 21
4.1 Overview of Goals and Strategies ............................................................................... 21
4.2 Decisive Turning Points................................................................................................ 24
5 Core Strategies ........................................................................................................... 25
5.1 Core Strategy 1: Regional Development and Management ........................................ 26
5.2 Core Strategy 2: Innovation and R&D Funding............................................................ 33
5.3 Core Strategy 3: Entrepreneurship and Growth in Young Enterprises ........................ 36
5.4 Core Strategy 4: Training and Human Potential ......................................................... 38
5.5 Core Strategy 5: Internationalisation of the Region and Businesses........................... 40
6 Performance Functions for Economic Development .................................................... 42
7 Implementation of the Economic Strategy Styria 2020 ................................................ 43
7.1 Economic Development in Relation to European Policies ........................................... 44
7.2 Economic Growth based on Comprehensive Regional Policy ...................................... 45
8 Monitoring and Assessment of the Economic Strategy ................................................ 50
9 Summary: The Economic Strategy in 120 Seconds ....................................................... 51
10 Sources and References .............................................................................................. 53

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1 Styria: A Region with Great Potential

The Styrian economy is characterized by its active creativity and absolute commitment to
innovation, its well educated people, its excellent entrepreneurial leaders and above all by its
new and original technological developments. Today, the strengths of Styria in the areas of
technological knowledge, training and entrepreneurial foresight can no longer fail to be recog-
nised.

In the second half of the 20th Century the economic situation of Styria was heavily influenced
by fuel- dependent industry and thus subject to economic fluctuations and growing economic
problems. State-owned enterprises changed from the beacon of hope for an entire region to
become a cause of economic difficulty that could not be ignored. Over many years unemploy-
ment became a dominant economic and political issue. In the 1990’s, using internal regional
potential and the cooperation of all stakeholders in the province, the region achieved a high-
profile turnaround and remarkable transformation to a region of Technology and Innovation.

An important stimulus came from the automotive industry and the many component suppliers
that over time started-up or settled here. The resultant dynamic effects increasingly drew in
other industries, resulting in the establishment of a variety of small, medium and large com-
panies with new innovative products, initially in local but later across regional markets. Today
it can be seen that a view beyond our own borders and the more “soft assets”, such as an
increasing confidence in our own abilities, has turned Styria into an attractive location for
national and international businesses. A key driving force that has become clearly evident in
Styria today, and regarded by many experts as crucial, is the desire to innovate. An increasing
number of individuals start-up a business in this region and take on responsibilities that often
impact beyond their immediate sphere of influence, providing for employees and their fami-
lies and securing prosperity. The relevant facts demonstrate Styria to be a highly motivated,
technology aligned region for entrepreneurs.

The wide variety of products and services, plus the capability to build, maintain and extend
national and international networks make Styria one of the most exciting economic regions in
Europe. The success of many new businesses and the growth in key traditional industries is
based on a spirit of excellence in education, research and innovation that the population of
Styria can be justly proud of. In the wake of the recent economic and financial crisis it has
never been so clear demonstrated that Styria is a region that has truly “come of age”, where
its population shows flexibility and resilience to criticism in the face of severe global winds of
change and where the will exists to change and develop further. “In defeat one learns more
than in victory” is a motto that is valid for more than just in sport.

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If the human potential in Styrian businesses is to be used to its full extent, now and in the
future, then it must be with a clear commitment to the promotion of technology and innova-
tion, the underpinning of education and training, and the reinforcement of networks linking
research and business practice. Today the rules of the game are no longer what they were
before the crisis. The challenges in international competition now emanate from countries
that previously, despite their huge populations, hardly played an economic role.

Amidst these sometimes dramatic global changes, the aim of the new Economic Strategy is to
establish for Styria the right course for the future. Styria holds the potential to assert itself as a
comparatively small but increasingly mature, flexible and innovative player in global competi-
tion. In this, the Economic Strategy: Styria 2020 will play a key role.

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2 The Economic Policy Framework

2.1 Economic Environment

Until the outbreak of the world-wide economic and financial crisis, Styrian business made
good progress against the key economic indicators. In the years up to the crisis, growth of
Styrian economy lay above that of the EU-15 countries. From 2004 to 2008 the number of
employed, compared nationally, grew well above average (Styria 2.1%, Austrian Average
1.8%). Traditionally high unemployment rates sank to the national average level - much lower
than comparable international rates. Export quotas were raised to 58% of GNP. This positive
trend experienced a sharp reversal in the middle of 2008 due to the global economic and fi-
nancial crisis. As with all exporting regions, Styria was badly hit by these events. Production
and exports fell significantly, and unemployment rose rapidly. The stabilising factor of small
and medium enterprises (SME’s) that are predominately focused on regional markets also had
impact on Styria. The international response on economic policy followed swiftly and compre-
hensively. Thus a severe depression could be avoided in a timely manner.

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Since 2010 the economy has started to recover. The prognosis of economic research indicates
that Austria will follow a growth rate of between 1.5 to 2%. A stable rather than dynamic
recovery is predicted by economic forecasters. Since 2010 production output has also been
growing in Styria, with a proportionally higher burden carried by leading exporting oriented
companies. Employment growth above the national average is expected. However, it is uncer-
tain whether the financial and money markets will remain stable and if this growth will be
sustained. The crisis has had particular repercussions on labour markets due to the increased
pressure on un-skilled workers.

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2.2 A New Reality and Rule Set

for the Region of Styria
The ever increasing globalisation of the last decade has produced striking change, not only in
production methods, but also in the field of R&D. The world-wide financial crisis, climate
change and the constraints on natural resources play an ever increasing roll in these changes.
At the same time the room for manoeuvre in public spending has been significantly reduced.
Thus the economic conditions for the region of Styria have become much tighter.

How manufacturing output has changed

The focal point for international economic development has already shifted in the recent past
progressively from the developed industrial countries to the emerging growth economies of
Asia and South America. In the future a strengthening of this trend is expected, especially
through the dominant BIRC countries (Brazil, Russia, India and China). Technologically these
countries have also substantially caught up. Whereas in former times, exports from BRIC coun-
tries were mainly bulk products, today they are increasingly high-tech products.

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Also of note is the move away from trade in finished products toward the internationalisation
of production. The implications are obvious: value creation occurs in different locations; com-
panies increasingly specialise on single processes, production steps and components.

In the medium term this leads to a redefinition of industry sectors and thus the requirements
of manufacturing in the region. The knowledge society advocated for many years is no longer
only of importance for individual sectors, it must become a reality in all areas.

Is a Raw Material Crisis threatened?

The global imbalance in access to raw materials for industrial use represents a real threat to
industry. It is less an issue of rising prices or finite resources, so much one of actual access to
specific raw materials.

Additional challenges are arising in connection with strategies to reduce carbon emissions and
adapt to climate change. Thus, renewable energy, efficient use of resources, new materials
and processes move to centre stage in our efforts.

The reduced freedom of action for government

As a consequence of the government bailouts, stimulus packages and losses in tax revenue
associated with the crisis, the debt of public budgets in the EU countries has increased mas-
sively. This has also lead to a restriction in the freedom of government action in Styria and
demands a focus and alignment toward future oriented themes.

Risks and uncertainties in currency and financial markets

The high level of debt leads to increases in risks and uncertainties in currency and financial
markets, right up to a threat to the common European currency ("euro crisis") and poses a
danger to economic development. The more stringent capital requirements resulting from
Basle III and the increased risk aversion of banks impede necessary investments. The promo-
tion of private equity and venture capital markets, especially for start-ups, will be of particular
importance.

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2.3 New Economic Structures

The dramatically changed circumstances make new structures for the domestic economy
imperative. The success factors for the economic region of Styria are no longer the same.

Styria stands at the start of second phase of transformation. The first successful phase was the
transition from raw material processing to high value technology products and increased R&D
activities within the region.

The second phase of transformation brings with it more specialized high-end niche products
and components, customised solutions and complex industrial services. Manufacturing
systems will become smaller while at the same time technology and innovation become more
intensive. In the long term only “knowledge-based methods” will survive. Of critical necessity
is a rapid transformation to a knowledge-based manufacturing economy with an expanding
service content. The preconditions for thus include a close connection to the research com-
munity, a sufficiently skilled workforce and an efficient use of resources.

The importance of service content will increase with particular significance for the production-
related service sector. Many new business models and service offerings will be generated. At
the same time the production of material goods will increasingly develop towards product-
logistics combinations. IT will move from a basic service to an “enabling technology” for busi-
ness. Growth will also occur in the health care, tourism and leisure sectors, where Austria al-
ready has distinct international competitive advantages. In this respect Styria holds specific
opportunities that make it particularly well placed for success.

Technology for All

Technology oriented and innovative businesses and the formation of new business start-ups
will become the future drivers for growth of manufacturing industry in Styria.

New technologies will also penetrate deeper into local demand based craft industry as well as
the entire service sector. The construction and related industries will continue to provide an
employment base for the rural regions of Styria.

How the Region of Styria will change

Two factors are becoming of greater importance for manufacturing: new technologies and
external services. Ideally these should be located centrally around research and educational
institutions. As a result companies are increasingly moving into the Graz district and along the
central axes of development to the south, resulting in a significantly altered urban develop-
ment. This will cause simultaneous processes of growth and decline in Styria with shifts to-
wards the central region of Graz and to municipal areas with better accessibility.

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Highly skilled workers will have an easier time

Workers with good to very good qualifications will become of significant importance for the
economy. The elimination of jobs in low-skill and low growth areas poses the threat of rising
structural unemployment, and at the same of large scale shortages in highly qualified profes-
sionals. High demand is predicted for partly publicly funded jobs in health and care services.
Their funding is closely linked to the success of the manufacturing and exporting sectors.

Population Growth and Change

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Styria is faced with weak population growth and a strong increase in percentage of older
people. This will notably impact the age structure of the workforce of Styrian companies, and
will change it significantly in the near term: By 2018 the number employees over 50 years old
for every one under 25 will be 2.5 –in 2000 it was only 0.9. If left unchecked, in the course of
time this process will result in constraints in the innovation and productivity of the economy.
This can be managed by selective migration, through lifelong learning, by increasing the levels
and range of employment participation. There will be a great contrast in the impact of demo-
graphic change within the regions of Styria.

2.4 A Sound Basis for the

Active Management of Change
The high level of technical research and educational institutions and the wide variety of
scientific disciplines are local advantages that make Styria quite unique within Europe.

In this respect, the country clearly has a sound basis for developing a knowledge-based manu-
facturing economy.

More than half (55%) of the academic technical researchers in Austria's work and teach in
Styria. In many of the areas of technological core competence, this proportion is even higher:
of the Austrian R&D personnel at universities Styria accounts for 73% of those in Mechanical
and Automotive Engineering, 75%, in Metallurgy and Materials Science and 58% in Chemical
Engineering and in other interdisciplinary technical sciences. However, our technical universi-
ties are increasingly struggling with the conditions whereby highly qualified teaching and
research staff decide to leave for other locations. Many students move away from Styria after
graduation. Currently there is not enough to keep them within the region. Several measures
are required to prevent this "brain drain" from developing.

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In recent years Styria has achieved a remarkable catch-up, which has put R&D spending up
amongst the leading group of European regions. This has allowed the number of R&D oriented
companies in Styria to be expanded by approximately 150. 24% of federal R&D funding for
industry goes to Styria. The broadening of cutting-edge innovation remains an ongoing task.
The interaction between university and industry research, for example in the centres of excel-
lence, is the basis of a strong position in collaborative research. However, many of these exist-
ing strengths are not unique features of Styria. Increasingly they are becoming international
standards. The opportunity lies in the systematic development of the region in the key areas of
research, education and training, together with areas of particular strength in Styria.

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2.5 The Strategic Levers for Economic Development

Worldwide competitive pressure is increasing. The requirements for a successful region are
becoming more complex. Styria will only withstand these competitive pressures through the
development of levers that encompass the best opportunities for economic development. In
addition to direct funding, the goal of economic policy, to help improve the competitiveness of
the Styrian business and strengthen the economic region, can best be pursued by actively
shaping the business environment.

Lever 1: Innovation Foundation

Competitiveness and the realisation of growth can only be gained through innovation. The
guiding principle of the economic strategy "innovation as standard" is therefore still valid.
Every effort is required in order to create sufficient growth; growth that creates employment
and matches the new requirements of the efficiency and conservation of resources.

Lever 2: Key Success Factors of R&D and Human Resources

Today, as a result of global economic ties and the increasing competitive pressures, economic
regions grow up where internationally competitive companies come together with the appro-
priate research and educational institutions. It is at precisely these locations that global lead-
ership in technology and know-how is generated. Regional development must therefore
pursue the following goals:

Improvement and further systematic connecting of businesses into the research and
knowledge landscape,
Increase the commercial exploitation of the "knowledge base" to raise regional value
added and
Increase in the number of skilled employees

A broader understanding of location and economic development is required to be able to

create the necessary framework for these goals.

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Lever 3: Aggressive Economic Policy and Support

of the Business Potential of Styria
Leading regional companies:
The pace of development, and in particular of innovation, is essentially characterized by
leading companies operating internationally. This base is formed by about 200 large industrial
and leading companies with approximately 60,000 employees, of which about 75% are in
companies of up to 500 employees. They are classified under EU competition law as large
enterprises. They are at the heart of inter-company regional competition and act as niche
players in global competition. For the region of Styria it is important to protect the existing
competitiveness through appropriate measures. At the same time, large companies take on a
role model, networking and stimulus function and provide an impulse for SMEs through
cooperation (for example, in component supply or export networks). This interaction between
"large" and "small" continues to be a key factor in regional development.

The potential of Styrian SME’s to generate a regional development policy:

A study by the Austrian Institute for SME Research – used in the development of this
strategy – indicates that:

 Earning capacity is linked to increasing size of production units;

 In addition to the growing number of sole traders - there is a positive impact on the
employment situation - especially from larger sized SME groups (of 10 employees and
upwards);
 Productivity improves significantly amongst Styrian SME’s with larger business size,
particularly those with more than 50 employees, and that
 The Export capability (Export share) rises with increased business size.

These companies, from the target groups "manufacturing sector" and "business support
services", are making increasing contributions to the key economic policy objectives (employ-
ment, export capability and capacity to innovate).

From the portfolio of businesses in Styria, mainly drawn from trade and craft industries, a
group of approximately 2,000 small and medium-sized enterprises, crystallizes out that repre-
sents the greatest potential for growth and makes an key contribution to economic policy
objectives for example in innovation and exports. Through these companies approximately
60,000 jobs are generated. Following on from this, is the group of companies that will form the
next generation (in the years 2009 to 2018 about 7,000 companies with up to 62,000
employees). The maintenance of these companies underpins a healthy stock of small and
medium enterprises.

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Surveys by chambers of commerce indicate that SMEs perceive obstacles to development,

especially from high taxes and the administrative burden. A comprehensive SME and
economic policy is therefore primarily there to improve the business environment. Here EU,
federal and provincial levels need to be addressed. At the state level administration options
(such as simplification of procedures) should be explored.

„Specific Drivers for Growth“ – an aggressive economic policy:

In summary, in the order of 2,200 companies form a stock of "specific growth drivers" for
Styria. These enterprises generate a total of approximately 120,000 jobs in Styria. They are
therefore the primary target of an aggressive regional economic policy. Added to this are also
start-ups and young enterprises with growth potential.

Lever 4: Entrepreneurship and Start-ups

Young enterprises implement new ideas and business models to strengthen economic change
and create jobs. They primarily support a vibrant economic environment and form flexible
networks. The number of sole traders (about 30,000 in 2009) is rising sharply and now com-
prises about 55% of Chamber of Commerce members. These companies, about 1/3 of them in
trades and crafts involved in Styria, must be given special support to enable them to grow
further. Styria is in general a good ground for the development of young enterprises with
growth potential. A decisive factor will be whether it is possible to guide these companies into
a growth phase by a focused, yet flexible support.

Lever 5: Improvement of the Financing

The uncertainties in financial markets and the provisions on "Basle III" tighten credit condi-
tions for enterprises, particularly because of the traditionally high level of debt financing in
Austria. Especially in Austria, the poorly developed risk and private equity financing for young
companies has collapsed. These circumstances make it necessary to make greater use of loans,
equity investments and guarantees and warranties in the support to business and strengthen
the strategies for mobilizing private investment capital.

Lever 6: Internationalisation
During times of economic globalisation Styria requires international companies and a clear,
original and differentiated profile. It therefore needs a value proposition, clearly structured
according to themes and functions that set the framework for a new form of economic
development. This profile subsequently forms the basis for a campaign of internationalisation
of the region and its businesses. Geographically it includes, further inroads into east and
south-eastern Europe, but especially the preparation of businesses and regions for increasing
interaction with the more distant growth markets.

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Lever 7: Regional Potential

Styria benefits from land for expansion, attractive natural and recreational areas as well as a
high quality of life, and generally good location factor conditions.

Compared to other European growth regions, Styria is structured on a small scale and has
considerable potential, such as in technology and creativity. Internationally, knowledge-based
regions are increasingly the most competitive. Current, highly dynamic business requires
operational locations that can be connected to and maintained through a variety of internal
and external networks. A location can only succeed, where the opportunity exists to link the
presence of international companies with research, education and high-quality infrastructure.

The key drivers for growth emanate from urban areas. In addition, structural change leads
to a shift in factor conditions that favour high-ranking sites. Growth centres, therefore,
assume an important function for the development of employment and further for creat-
ing jobs nationwide.

The high quality of life and landscape diversity in Styria form a clear location advantage.
To support the development in rural areas - which are often affected by migration - re-
quires measures that go far beyond economic development in the strict sense, and thus
impact other policy areas of the Province of Styria. Thus initiatives targeted at strengthen-
ing the endogenous, natural spatial strengths of the regions, remain crucial. However, is
also necessary to secure access in the field of communication technologies.

 A special case exists in the industrial region of Upper Styria, where the characteristics of a
central region, with a long industrial heritage, are combined with unfavourable
demographic trends. This concerns additional mobilisation of the entrepreneurial poten-
tial in the region and development of its research, innovation and training capabilities. At
the same time it also requires a broader development perspective, which accelerates a
link up of the Upper Styrian region with the Graz central area, supports facilities for
commuting in the urban core areas of Upper Styria and secures the attractiveness of the
region, through cultural activities, integration and education.

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3 Styria 2020:
Vision for the Economic Region
Styria has a clear vision of economic policy: By the year 2020 the region will become a pan-
European benchmark for smart transformation towards a knowledge-based manufacturing
economy.

New solutions and services in markets such as Mobility, Health Care and Environment will
develop, with a strong focus on new clean technologies. Styria will therefore create unique
value propositions in areas such as "clean mobility". In the area of "green technologies" 20,000
new jobs will be created in the course of this development. Economic progress is based on the
technological core competencies of Styria such as materials technology, mechanical engineer-
ing and plant construction, process engineering and technology. This will have the vital
support of an increasingly dynamic and highly internationally oriented creative industry,
providing an innovative image for the region and equipping companies, brands, and products
with an emotional value added.

Styria 2020 = Technology and Creativity

In 2020 the region will be characterized by a high competitiveness of existing leading compa-
nies, an increased number of medium-size technology companies and technology-oriented
service providers with high export shares in global niches. These companies will interact
closely with universities and research and educational institutions. A wide range of SMEs will
be involved in this innovation and export dynamics, so that Styria will count among the top
regions in Europe. Because of this close cooperation between industry, research and educa-
tion and because of the positive environment for young, up and coming entrepreneurs with
compelling business models and innovative technological solutions, Styria will become a focus
for critical national and international acclaim.

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An ideal Double-Pack: Innovation and Quality of Life

The basis of future success in the economic region of Styria will thus be formed by its innova-
tive companies and excellent higher education institutions. This creates an environment where
scientific know-how is directly converted into value.

Quality of life, security, culture and diversity of recreational and natural environment are also
important elements to make the region attractive. Newly created educational opportunities
will allow Styria to become an interface for technological education, creativity and human
resources. The value added of knowledge work will raise local purchasing power, enabling the
dynamic development of trade and local service companies. This radiates into rural communi-
ties, where local supply can develop positively into improvements in town centres, leisure
services, and trade and commerce.

The positive development of the economic region will be reflected, among other things, in a
better development in job creation and unemployment levels, and a turnaround in net migra-
tion relative to the Austria.

Knowledge and innovation are the two key qualifications of the future, for workers and for
major and small employers - and of course for the total economy of Styria.

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4 Styria 2020:
Goals, Strategies and Axes of Change

4.1 Overview of Goals and Strategies

Economic and Regional Policy Strategies

Economic and regional policy oriented toward the sustainability of the province should follow
clear policy objectives and strategies. In so doing it sets out the medium-and long-term
framework for economic development and actively lays the foundation from which the meas-
ures and funding programmes of the Economics Ministry are derived. The framework, thereby,
must be flexible enough to adapt to new realities.

The economic policy direction of Styria, defined five years ago in the strategy "innovation as
standard", has proven itself. The new Economic Strategy: "Styria 2020 – “Growth through
Innovation" builds on this and forms the basis for future economic policy of province.

Objective: Growth through Innovation

The priority of economic policy is to enable economic growth and expansion of employment.
Competitiveness that enables growth can only be achieved through innovation. Today, follow-
ing on from the crisis we speak of a new growth.

The concept of the new growth is based on the conviction that, increasingly, a meaningful
contribution to sustainable economic development can only achieved by more efficient use of
resources and the sustainable development of "regional capital" (know-how, infrastructure,
environment). Thus the resilience of Styria is strengthened. A new quality of growth is
required that can only be achieved by a high degree of innovation in the economy. Growth
through innovation is the focus of our objectives.

The economic development of Styria is closely intertwined with the global economy. There is
little or no real influence that can be exerted on this from within the region. However, Styria
can enable the best possible factor conditions in order to support the regional growth proc-
esses.

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Strategic Goals
In order to achieve Growth through Innovation the following strategic goals have been
defined:

To focus the region of Styria on three sustainable themes with innovation and
growth potential: Mobility, Eco-Tech and Health-Tech. The related core competencies
need to be strengthened in order to give Styria international visibility.
To continue to support the innovation dynamics of the leading companies in order to
maintain and expand their contribution to value creation and employment in the region.
To integrate the innovation processes into more Styrian companies and increase
the focus on the service sectors: through targeted economic policies Styria shall become a
model region in which regional know-how is converted into value added, as the transfer
from research into production is improved.
To create very good conditions for business start-ups and young enterprises with
growth potential: thus in the long term new internationally networked enterprises based
in Styria will emerge, with the potential to be future Head Quarters (HQ) and Centres of
Excellence (CoE).
To prepare businesses and the region for the demographic developments and put in
place new training measures for key personnel and professionals.
To internationalise Styria and create an open environment: Appropriate develop-
ments for networking within and outside of Styria shall be promoted.
To align Funding and Finance with the growth phase of the companies and future
investments and thus facilitate new, high quality and resource-efficient economic growth.

Styria aims to establish itself as a European benchmark for the organisation of intelligent
transition to a knowledge-based manufacturing economy, with the commitment to
resource-sensitive growth.

The number of internationally competitive companies shall establish the broadest possible
base. Small and medium-sized enterprises shall be guided in appropriate economic and
regional development themes and involved in the growth, innovation and export dynamic,
through readily accessible funding instruments. They should also be assisted in access to fed-
eral and EU programmes.

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As part of the economic funding and development programmes the different regional
conditions will be taken into account. In disadvantaged regions, EU competition law and the
definitions for investment-oriented measures, for national regional development areas, allow
for the potential to support large enterprises; this also includes improved project funding
opportunities for SMEs. In areas particularly affected by migration and demographic change,
the endogenous development potential shall be tapped through cross-ministry measures.

Economic development is closely connected with a comprehensive appreciation of a region.

Strategic objectives can be actively shaped by the economic policy. Cross-ministry coordina-
tion of general factor conditions (such as education, infrastructure, energy, public administra-
tion) is important for the region of Styria, in order to improve the overall competitiveness of
the province.

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4.2 Decisive Turning Points

The Economic Strategy „Styria 2020“ will lead to new strategic priorities for the future opera-
tional direction of economic development in Styria:

11 Core Competencies 3 Key Themes

Concentration of the active regional development into three main themes and
positioning the core technological competencies and regional assets

Economic Funding Active Regional

Development

Increasing the understanding of regional development through the integration

of research and education. Alignment of the funding instruments to regional
development.

Grants Comprehensive
Financing
Shifting the focus from individual projects towards a holistic view of corporate
development. Significant intensification of measures to mobilize private capi-
tal investment and the use of flexible financing and equity instruments of the
region.

Due to the situation in the capital markets, equity and financing instruments will increasingly
be used for funding, especially for young enterprises and companies in their growth phase.
This will mean the use of financing instruments to complement investment funding and a
transition to comprehensive financing packages, focused on enterprise development. Grants
will be used primarily for SMEs, for future-oriented corporate regional development projects,
for R&D and enterprise-wide mechanisms such as centres of excellence.

The extent and speed of this transition depends largely on the available budget.

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5 Core Strategies
The strategic objectives are grouped into five core strategies and implemented by three key
functions. They form the framework for the work of economics ministry in terms of short and
medium term plans and operational programmes. They also give guidance for external key
players and actors who are involved in and contribute to the economic and regional develop-
ment.

Through the implementation of these core strategies Styria will become a European bench-
mark for knowledge-based manufacturing enterprise.

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5.1 Core Strategy 1:

Regional Development and Management
For the Styrian economy, it is critical to align the region to its technological core competen-
cies and to the main themes of Mobility, Eco-Tech and Health-Tech. Only then will Styria
become internationally recognized. Regional development should be selectively strength-
ened and funding instruments matched accordingly.

Background
Growth and Innovation occur as a whole through an interlocking set of different factor condi-
tions. In this context, the integration of economic, scientific and educational infrastructure
takes on correspondingly greater importance. By active regional development competitive
advantages and ultimately a "regional system" can be created that cannot be easily adopted
by or moved to other regions.

Objectives
Alignment of the region to sustainable topics with high added value, innovation and
growth potential.
Develop clear positioning and development strategies within the key themes
Ensure attractiveness of the region through an internationally recognised position, relative
to the key themes and factor conditions. This will encourage top talent in business as well
as in science and research, to come to Styria and further develop its communities.
 Promote a synchronisation of the relevant players from industry, academia, research and
education that is naturally adjusted to the key themes.

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The Foundation of Regional Management: The Key Themes

The export and employment levels, the skills in research and science and the potential for
innovation form the basis for the three key themes. Development processes (e.g. for the clus-
ters) are organised along these market-oriented topics:

Mobility: An already established strength of Styria is the automotive sector that is

indicated in the number of employees, and in export volumes. New opportunities are oc-
curring, particularly in "clean mobility", in the manufacture of high-quality niche products
and in expanding the product range to include new offerings in the area of mobility - es-
pecially in the fields of aviation and railway systems engineering. As a driver of innovation
this sector is of great importance.
Eco-Tech: The efficient and sustainable use of natural resources is becoming increasingly
important. In this field of technology Styria currently has very good competitiveness that
in the short term permits employment growth. In the medium and longer term, however,
investment is necessary in technology development and technology expertise. The theme
of Eco-Tech includes renewable resources like wood that is particularly important for the
richly forested Styria.
 Health-Tech: Innovations in the areas of health and food technology show a high poten-
tial for growth and employment, not least because of demographic trends. The sector has
become stable during the crisis and will continue to grow long term.

The advantages of the Region of Styria

For positioning relative to the three key themes, Styria has at its disposal technological core
competencies and location advantages, particularly in regard to education and research. The
core competencies are formed by the classical engineering disciplines (e.g. mechanical
engineering, electronics, instrumentation and control technology). The high importance of
materials and materials technologies should also be taken into account.

The creative industries assume an inter-disciplinary function in relation to the strength-

ening of the innovation processes in companies through design, as a holistic creation proc-
ess for product and service innovation. Their function is also central in regional development
and in emergence of innovative environments.

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The Regional Portfolio: Working framework for regional management

The development of key themes and core technological competencies is actively in progress.
The technological developments in these key themes are based primarily on the existing
technological core competencies. Accordingly in the future, centres of excellence in Styria will
make a clear contribution to these topics. Regional development and management also inte-
grate naturally into each of the three key themes. However, this requires a simultaneous
openness to new and promising technologies and concepts. Support may therefore be given
when a project is of high relevance to the overall system and opportunities to form a critical
mass arises, thereby opening up new fields of opportunity. These key themes offer new
opportunities for all industries and stimulate innovative ideas.

Over and above this, business-related funding and financing will be geared toward the core
strategies, the project quality and the contribution to business development. Restrictions on
theme or technology are not envisaged.

New Regional Management

Key Theme
Regional Management
and Profile Development
Selected Positioning and Strategies

Action Plans and Flagship Projects

The regional portfolio sets the framework for regional development management by:

Positioning Styria in line with the three key themes

Developing a direction and specific strategies within each key theme and
Action plans, guidance and stimulus to develop projects within these strategies.

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Goal oriented Regional Management must therefore

 Organise and facilitate processes aimed at alignment of all the relevant forces in the region
toward excellence within the business areas and at the locations of highest leverage,
 Facilitate cooperation amongst key regional resources thus giving support to the creation
of critical mass. Key themes, technological skills and training functions shall be coordinated.
 Direct focus toward the commercial utilisation of existing regional skill-sets. The aim is real
economic impact and exploitation. (i.e. real "business development"),
 Ensure integrated use of the instruments of regional development and as well as coordina-
tion of the support functions of „funding and finance."

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Success Factors
1) Suitable conditions for the development and implementation of leading and im-
pulse projects: high-quality projects at the interface "education-science-business" are
always of regional politically significance. Therefore a framework will be provided for pro-
fessional development and evaluation processes and for appropriate funding and financ-
ing instruments.

2) The newly formed consulting services for Headquarters and Centres of Excellence
(HQ / CoE): The strategy is the development of existing HQ and CoE. This is comple-
mented by the endogenous development of new regional HQ / CoE based on young enter-
prises with growth potential and a targeted acquisition for business newcomers based on
the regional portfolio. Universities and centres of excellence will increasingly act as
attractors and under the remit "business development" will be strengthened and will be
draw into close cooperation with CoE around existing fields of excellence.

3) Centres of excellence as a central link between scientific and business-related

research: In this context, attention is drawn to COMET, a funding programme for the
development of strategic research topics, which is still actively supported by the province
of Styria.

4) Agencies, where the province of Styria participates, especially in clusters and

networks, will enter into a new phase of development: They will increasingly take
on a supporting role in regional management, by addressing the management of the
development processes in their area. This requires, however, a suitable framework. For
clusters & networks that see their exclusive role in the services for its members, a transi-
tional funding and self-sponsorship should be sought. Clusters and networks will be
subsequently prioritized in relation to their future growth prospects, and potential for
innovation and value creation.

5) A new strategy for impulse centres: Independent of location, this will be focused on
the development and management of high-quality special accommodation (including labo-
ratories) for technology-oriented companies in combination and coordination with
research and educational institutions.

6) Access to high-quality communications infrastructure: The Digital Agenda of the

European Union, based on the EU 2020 strategy, gives emphasis to high-performance in-
frastructure and advanced applications. It is a stated goal in the region of Styria, to ensure
widest possible access to advanced broadband infrastructure and innovative applications.
Information and communication technologies are increasingly taking on an inter-
disciplinary function as "enabling" technologies and are responsible for almost half the
productivity growth in the EU countries.

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Regional and economic development is an activity that requires "high skills" that must be
secured for the appropriate professional framework conditions. Improved synchronization of
the players in terms of joint development efforts and the search for synergies with the knowl-
edge landscape are further prerequisites for successful implementation.

5.2 Core Strategy 2:

Innovation and R&D Funding
For the domestic economy, the crucial question is whether it is possible to integrate
additional companies in the innovation processes and expand the range of
innovative services. Styria is to become a model region in which it succeeds because
a targeted economic and innovation policy transforms regional know-how into value
added.

Background
Even if the innovation activities in Styria of the last ten to fifteen years could be significantly
enhanced, the broadening of the innovation base still remains a permanent objective.

The framework conditions for innovation are changing: increasing customisation of solutions,
growing demand for services and high pressures on time, require proximity to market,
customer orientation and flexibility. In addition to R&D, service design, new business models,
product-service combinations and social enterprise-related innovations are becoming increas-
ingly important.

Innovation is increasingly influenced by the rapid translation of research results into market-
able products. A central task of economic policy is therefore to provide incentives to generate
more innovation from existing research results. The collaboration between academia and
industry should be intensified in international collaborations. Obstacles to cooperation should
be eliminated, for example, the level of information for SMEs in connection with the protec-
tion of intellectual property rights should be raised and improved.

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Objectives
Broadening of the "penetration" of innovation in the Styrian economy with systematic
R&D and innovation activities. The potential for such growth drivers in the manufacturing
economy and business services sector is estimated at about 2,200 companies.

Research results of universities, research institutes and centres of excellence must in-
creasingly be used for innovation. Improved factor conditions for transfer and reciprocal
research should facilitate this.

Strengthen innovation in enterprise and production-related services, as well as product-

service combinations.

Increase the number of companies that take advantage, of federal and EU funding pro-
grammes for innovation and promotion of targeted combinations of European, national
and state programmes.

 Improvement of the level of information acquisition and utilization of intellectual

property in enterprises, especially SMEs.

Success Factors
1. For a broader penetration of innovation
To raise awareness in companies of the subject of innovation, a combination of counselling
and awareness services (e.g. best practices) and "low-threshold" funding is expedient to facili-
tate access to innovation and collaboration with research institutions.

This has also been identified at a federal level. Therefore, the current instruments are signifi-
cantly streamlined and aligned with those of the federal government. The core of the toolkit
will provide a substantial R&D funding for SMEs in Styria, making possible the entry into larger
federal programmes. Consulting services and funding and financing tools will be developed
that support the flow of innovation from research to industry. Thus a total of a comprehensive
range of R&D and innovation will enable beginners.

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2. Expanding the focus on service innovation

Innovative services and new product-service combinations in industry and commerce are gain-
ing importance and are therefore integrated into the innovation. Even in the EU, shifts in inno-
vation policy, towards social services and business-related innovations, can be expected.

Appropriate funding instruments should be developed and implemented (e.g. a skills training
and consulting programme for service engineering, or a special use of federal programmes)
and awareness of new service models should be strengthened. The Styrian Research Council
recommendation, "Research, innovation and technology for the future”, has already pointed
in this direction.

3. Highly innovative projects for business development

Highly innovative projects for business development, differentiated by the degree of innova-
tion and the significance for the development for the company, will be promoted with
financial support and selective subsidies (especially for SMEs). The key criteria here is the
introduction or provision of new high quality and innovative products, processes and services,
that tap into the growth prospects for the company.

In addition, grants are especially effective for highly-innovative R&D projects with local impact
- such as the establishment or relocation of R&D facilities for new product lines. Particular
importance is attached to technology transfer projects.

In addition to existing businesses, companies relocating, especially HQ / CoE’s or larger start-

ups will be supported if they are connected with innovative products and / or production
processes and services and they pursue policy objectives on innovation, regional economic
and employment.

4. Innovation Service Provision through Economic Development

The central thrust is the advancement of businesses through the Styrian Business Promotion
Agency (SFG) in national and EU programmes in R&D and innovation. Appropriate services
offered by the SFG for the use of EU innovation promotion programmes will be expanded.
Existing services for national and international knowledge and technology transfer will be con-
tinued and modified as necessary. Other innovation-related service offerings will be developed
where previously no satisfactory offers exist on the open market for SMEs (such as services for
the acquisition and exploitation of intellectual property).

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5.3 Core Strategy 3:

Entrepreneurship and Growth
in Young Enterprises
It is crucial for Styria is to create outstanding conditions for start-ups and young enterprises
that have growth potential and are geared to international performance standards. The
focus on this target group is of priority.

Background
The strategy for the promotion of entrepreneurship - as an alternative to salaried employ-
ment, as a source of employment growth and for strengthening the innovation potential -
will continue. With its foundation of technical training, research institutions and industrial
companies Styria offers a very good environment. This potential should be used and further
developed.

Objectives
Services for the motivation, mobilisation and development of start-ups and young compa-
nies with knowledge intensive services and products shall be expanded and made more
professional.

The number of projects with financing and equity instruments is expected to rise signifi-
cantly. Private investors will be sought, and the province of Styria will give further support
to young enterprises as opportunity occurs.

 Styria shall excel in the promotion of innovative enterprises through factor conditions and
position itself internationally as a model region.

Success Factors
1. Strenghten young knowledge-intensive enterprises with growth potential
The goal is the direct conversion of the regional scientific expertise into value creation. This
demands a clear focus on young, innovative companies with growth potential. These compa-
nies take on huge risks, but can also contribute significantly to economic development. With
this target group, in the first instance, this mainly involves:

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Funding and financing measures in different start-up and growth phases. The defini-
tion of a "young" enterprise covers far more than five years after the date of incorpora-
tion. The decisive factor is the improved access to capital through the expansion of
financing and investment instruments in the province that can take effect flexibly and
quickly. This requires the creation of enhanced measures to mobilise private investment
capital, including advice and support to business in the growth phase.

The creation of good infrastructural framework conditions for innovation, knowl-

edge-and technology-oriented start-ups and young enterprises. This includes the creation
or strengthening of laboratories and technical facilities, but also professional support and
coaching.

2. Entrepreneurship and start-up support

Entrepreneurship needs to be promoted more effectively in Styria. For specific target groups
such as new self-employed spin-off founders or sole traders, additional information and
awareness measures are necessary. In this province, several organisations are already actively
working together in the initiative "Business Founders Styria." The Ministry for Economy sees
itself as a founding partner of this network, bringing with it the key focus on innovation-
oriented start-ups, and supports the work of the initiative through project funding and man-
agement functions.

3. Business succession
A special target group are business successors. Successfully succession directly affects the
competitiveness of the economy and job security. It is estimated, in small and medium
enterprises over the period 2009 to 2018, that approximately 7,000 companies have the
potential for succession. According to the Austrian Institute for SME Research, up to 62,000
jobs are associated with this. The Ministry for Economy will continue its initiatives to support
businesses during the critical phase of succession and set appropriate priorities in the strategy:
The focus will be on securing companies with growth potential whereby ownership transfer
phases may also be timely points to strengthen innovation capability. Business successors can
also provide an important function in securing local supply structures.

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5.4 Core Strategy 4:

Training and Human Potential
It is crucial for Styria to prepare business and the region for demographic change and
to deploy training programmes for key workers and professional. The strengthening
of human potential plays a central role.

Background
In a knowledge-based manufacturing economy, well-trained and dedicated "people" are a
decisive factor for economic and regional development. The already difficult situation in the
access to specific experts in the technical fields is exacerbated by the demographic processes.
Existing government accords for the province provide for the development of Styria into
"Regional educational role-model” through an appropriate campaign. The reform of the
education sector will require a massive change, which can only be implemented in partnership
between all stakeholders, and in particular involving the federal government. In particular
specific areas will be defined where the Ministry for Economy will determine and actively
pursue measures for funding and development.

The focus of the measures will be extended from company training to the management of
corporate human potential and, in addition to support to business, new location-based
support measures will be implemented.

Objectives
to support enterprises in the field of human resources, on issues such as the increasing
diversity within the workforce (age structure, migration background, etc.)
Improved coordination and synchronization in the knowledge triangle "economy-
research-education" in the context of location-based development themes
Creation of specific opportunities for international experts and key personnel within the
region of Styria
Low-threshold training programmes for small businesses and start-ups

Success Factors
1. Business related funding
Forward-looking approaches, such as the development of future top, professional and
potential leaders will strengthen the competitiveness of enterprises. In addition to normal
training, this will include individual tailored training, in the form of in-depth or specialist
courses, matched to the
needs of companies. In addition to the continuation of proven instruments in the field of
workplace training, learning as ongoing corporate mission will be established to ensure
adaptability and competitiveness. Thus, companies will become "learning organizations"
with the appropriate knowledge and management skills.

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Companies are faced with new challenges such as aging population, depopulation of rural
areas, migration and diversity of the workforce. This must be factored into company
development. Support in the future will therefore be viewed with a wider brief and in-
clude comprehensive management of corporate human potential.
 In parallel with this, smaller companies will continue to be addressed through
low-threshold training programmes for the self-employed. Such training programmes are
often the most effective approach to business development.

2. Regional Development for Human Potential

Besides the support to business to improve and promote the training, the corresponding
location factors are being actively addressed. The Ministry for Economy contributes to this
development and will specifically promote the following topical areas:

Key personnel for the region: Training programmes for staff are essential. It is also
important to attract additional and already highly skilled workers and to engage their
enthusiasm about the company or the location. This requires the development of an
inter-ministerial strategy for recruitment, acquisition, integration and retention of quali-
fied professionals, researchers and technicians.

 Expert and teacher training and new talent in natural science and engineering educa-
tion: The development and piloting of new training courses, vital for economic develop-
ment, can be supported through the involvement of educational institutions in the
regional development processes. The training of skilled workers in technical fields must
become more attractive. The Ministry for Economy supports companies that offer
training and development opportunities for apprentices based on the existing training
standards in the dual system of education. Notable shortages exist in experts in the fields
of engineering, computer science and natural sciences 1). In addition to the commitment
of business, meeting this challenge requires an interaction between different areas such
as education, training, youth work and vocational guidance. The Ministry for Economy will
contribute to an inter-ministerial strategy in education and training.

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5.5 Core Strategy 5:

Internationalisation of the
Region and Businesses
Large scale internationalize the region is of enormous importance for the future of
Styria. This demands appropriate activities within the province to promote exports
and to expand the global network.

Background
In a globalised economy internationally positioning is perceived essential. The export quota of
Styria was particularly noticeable during the boom phase. The export base could be further
broadened in recent years. Each job in the export industries in Austria on average creates
another job in the production, trade and services sectors. However, the export base is still too
heavily concentrated on a few key industries (automotive, metal) and on neighbouring export
markets (Germany, Italy). Broadening the export base of Styria therefore requires urgent pro-
motion.
The markets in Eastern and South-eastern Europe have to be developed further, and compa-
nies have to be prepared to increasingly enter the more distant growth markets. Ultimately,
internationalisation requires a globally competitive regional presence, with strategic alliances
and partnerships in other regions and the appropriate use of networks around the world.

Objectives
Increase in the Styrian small and medium enterprises operating in export markets,
through motivation, mobilisation and professional advice.

Strengthening of cooperation with professional services like the Chambers of Commerce,

observing the principle of "single point of customer contact,"

Internationalisation and export strategy for the region of Styria.

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Success Factors
1. Advertising and professional marketing for the region
An important objective in "marketing" the region of Styria is a clear, original and easily
communicable profile. The three main themes, the regional portfolio and strategy for key
workers should be taken into account in the development of this particular profile. In
addition to companies the regional marketing campaign should also address experts in
research and other top executives. Styria shall be promoted as a desirable business location
that attracts qualified people and companies from around the globe.

2. Strengthen the export capacity of business

 The EU Framework Programmes (with EU direct funding) should be directed to focus on
economic-related programmes and projects, including training and education, and
brought together in a "one-stop-shop". The aim is to expand the participation of Styria
and their companies in these regional programmes.
 A key priority is the use of federal export support. Endogenous support programmes shall
only be developed in key niche areas. Special financing may be undertaken within the
context of nationwide programmes.
 In the context of regional development and training, it will also be considered whether
there is additional need for education and training in such areas as intercultural manage-
ment amongst the large number of export sales personnel, etc
 The use of intermediaries that are active on behalf of the province shall governed by ser-
vice agreements. Furthermore, internationalisation activities between the participating
organizations shall be coordinated.

3. The relationship of Styria to Eastern and South-eastern European Countries

The integration of Styria in the European market has progressed a long way since entry into
the EU. The Region is now able to benefit from the stabilisation, catch-up and integration
process of the South-Eastern regions of Europe. Cooperation in the fields of infrastructure,
education, research and development must be expanded and coordinated with the European
strategy of the province. Transnational EU programmes need to be aligned accordingly.

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6 Performance Functions for

Economic Development
The implementation of the objectives and core strategies is divided into three performance
functions: Public Awareness, Development, Funding and Financing. Plans and contributions
to the development of the region should be structured in line with these functions as follows:

Planning and implementation within the Ministry for Economy will follow the performance
functions. They also provide guidance for those partners in regional development which
contribute through projects, initiatives and programmes in development of their own
business in the region of Styria.

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7 Implementation of the
Economic Strategy: Styria 2020
The Economic Strategy: Styria 2020 builds on the strategy „Innovation as Standard ", and
consolidates and further develops the transformation partnership in Styria in the field of
"business innovation". This leads to a new understanding of growth and a correspondingly
adaption of economic policy measures.

According to the Economic Research Institute (WIFO) 75% of growth is due to technological
progress in the broadest sense. It is therefore important for the economic and regional
development of Styria to focus on future and growth oriented projects and to equip them
with adequate resources. The implementation of economic strategy, however, is naturally
closely connected to the available annual budget.

Based on expert opinion, the economic region of Styria has good opportunities to succeed as
a winner and to generate new growth. This requires joint supported development efforts.
The core strategies are from those areas in which the Ministry for Economy is involved and
which will make Styria fit for the future.

A reciprocal agreement with areas such as education, science and energy strengthens the
sustainability of the region and supports Styria on its path to become a European benchmark
for the transition to a knowledge-based manufacturing economy.

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7.1 Economic Development in Relation

to European Policies
The strategy - Europe 2020 - was developed as a result of the financial and economic crisis
and against a background of dramatic changes in climate, and resource scarcity. The Euro-
pean Union relies on a new integrative growth strategy with three priorities:

1. Smart Growth: an economy based on knowledge and innovation

2. Sustainable Growth: a resource-saving, environmental and competitive economy and

3. Inclusive Growth: promoting a high-employment economy and social and territorial

cohesion.

Europe 2020 is of importance for Styria in the following areas:

Implementation of the flagship initiatives (e.g. Innovation Union, Digital Agenda)

Expected gain from the Framework Programmes for Research and Innovation

New framework for the promotion of regional significance for Styria: limitation of direct
business subsidies, "smart specialization “on growth areas, and strengthening of revolv-
ing soft present value funding instruments

This opens up opportunities for Styria to increasingly participate in the many programmes of
the EU for R&D and innovation, human resources, or for regional development. This requires
the formation of strategic alliances with other regions and the appropriate use of partnership
networks. The Economic Strategy: Styria 2020 addresses these challenges and supports the
key objectives of Europe 2020. The strategy is thus the basis for the redesign of the follow-up
programme "Regional Competitiveness" in Styria from 2014.

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7.2 Economic Growth based on

Comprehensive Regional Policy
Economic development is closely connected with a comprehensive view of a region. What
can be achieved by the economic policies themselves and where the Ministry for Economy
will be called on particularly is indicated in the core strategies and performance functions. A
reciprocal agreement in areas such as education, science and energy strengthens the future
viability of the region.

Education and training

Due to specific needs for technically skilled professionals and because of demographic
change, Styria will be particularly hard hit by the problem of "skills shortages". The govern-
ment backed proposed educational campaign for the province, that aims to develop Styria to
a "regional educational model" through educational innovation, requires a massive change
and the participation of a broad partnership. This requires the following points:
Modernisation of the education system including continuous individual potential devel-
opment starting at preschool age, expansion in types of all-day school schooling, and
more intense measures for early learning
Promotion of interest in science and technology, through provincial and federal govern-
ment initiatives, increasing the attractiveness of the key areas of study
Orientation of the colleges towards areas with long-term labour market demand
Enhancing the integration of migrants into the education system
Promotion of entrepreneurship in school education
Apprentice Training: Further modernisation of apprenticeship programmes through
modularisation, linking training with higher education (graduate levels)
Of central importance is the engagement of the interest of more young people in technical
and scientific education and job opportunities.

Science and Research

Today, economic development occurs where internationally competitive companies meet
together with research and educational institutions, thereby developing leading global tech-
nology and know-how. The Styrian Research Council recommends that research institutions
should also have appeal to the most distinguished scientists in the world. Institutions must
succeed in attracting the best students and to make this possible, they must have the appro-
priate infrastructure (buildings, IT, laboratory facilities, etc.) to enable excellence in research
(basic and applied).

Above all, science needs to focus on areas of potential opportunity and be actively involved
in regional policy.

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Synergy can occur through the following:

Promotion of laboratory infrastructure, including the use of EU funding, for key devel-
opment themes for the region of Styria
Opportunities to promote endowed chairs in related economic and industry fields
Support to universities in attracting high-calibre experts, in the establishment of profes-
sorships, as well as in scholarships for future managers
Development of clusters in interdisciplinary science-based training

Labour market policy

Within employment and labour market policy, a focus on active skills training is necessary.
Emphasis should be given to youth employment, especially in accordance with the objectives
of the partnership for reform. Incentives must be created to attract qualified young people
along a learning path that leads through the teaching of advanced skills. Furthermore, train-
ing is required for less skilled workers in skills relevant to labour-market. It is crucial for the
economic region to link labour market policy with economic policy priorities and themes and
with the most promising areas of future skills training.

Demographics & Integration

Expert opinion of the Institute of Economic Research (WIFO) indicates that a "growth
penalty" or funding problems within the social services does not automatically follow on
demographic change. The challenge posed by demographic factors is real, but manageable,
at least in the medium term, provided consequent and consistent measures to mitigate
possible negative economic effects are taken. Up to 2030 the ratio between active employ-
ees and the unemployed in Styria can be held at the current level. A prerequisite for this is
that the growth in employment participation over the next 20 years shall follow at least half
the trend of the last ten years. This is a realistic assumption, if mobilisation and employability
of workers are achieved:

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The integration of migrants should be strengthened. The conditions need to be gener-

ated, to attract qualified persons to Styria and to better integrate persons with an immi-
grant background into the labour market and the education system. Business can play
an active role through novel projects, and for example view diversity management as a
subject of entrepreneurial development.

 Strategies and actions are particularly necessary to increase work participation levels
amongst women and the older people, to avoid a decrease in the number of employed.
A key point here is to maintain the ability to work.

Infrastructure
An excellent infrastructure is the foundation of a successful region. The expansion of the
southern rail-link, with the Koralm tunnel and the main Semmering tunnel, as part of the
Baltic-Adriatic corridor, is an essential prerequisite for development in Styria. In addition, the
international connections of Styria should secured by anchoring of the most important trans-
port routes to the EU Core Network and the EU Comprehensive Network. The potential for
development is increasingly moving into "metropolitan areas". In Styria, this is the central
area of Graz. Good connectivity should therefore exist along the axes of development to the
south – these provide the stimulus for economic development.

Tourism and Rural Development

Rural areas in Styria are of outstanding importance, not only because of their geographic
extent, but also because their function as residential areas and recreational and leisure
space. In addition to various commercial and industrial enterprises, particularly in natural
resources (wood, food), agriculture and forestry, these areas form an important platform in
their transition into multifunctional service providers, as well as through their tourism and
leisure services. Furthermore, crafts and trades in construction and related trades have
emerged as foundation for rural areas. These trades have also partly succeeded in expanding
their markets from the rural into urban areas - where trades and industry are being increas-
ingly replaced by the service sector. The construction sector will therefore continue to consti-
tute a significant employment base for rural regions.

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Quantifiable added value will be generated through the interplay of regional value chains
between businesses, agriculture and tourism industry. Thus, new jobs and public assets will
be created that enhance the location benefits of Styria. Based on these natural advantages
combined with the cultural image of Austria, new features in our rural areas will evolve in the
socio-cultural and in the economic spheres.

Healthcare Sector
The secondary healthcare sector, which is based on prevention and provision of care, will
experience a growing economic importance. Demographic change, medical-technical
progress and the willingness of people to increasingly deal with the issues of healthcare, in-
crease the demand for health services and products. According to a study commissioned by
the WKO (2009), voluntary private healthcare expenditure in Austria for preventive care will
approximately double (from 11.7 to 24 billion €) in the period 2005 to 2020. There is a lot of
potential in the healthcare sector in Styria, with about 15% of all biotechnology facilities and
one fifth of all natural thermal spas in Austria being located in the green state. The cluster
organizations Human.technology Styria and TECHforTASTE, together with the beautiful natu-
ral landscape of our province with its excellent base for sports and health spa facilities,
provide optimal conditions for establishing Styria as a healthcare region of the future and to
make the best use of the synergies between the primary (public) and secondary (private)
healthcare sectors.

Climate and environmental protection

With the Climate Protection Plan, a master plan for the province of Styria has been devel-
oped. It should help to achieve the agreed EU 2020 Energy and Climate Package targets to
reduce greenhouse gas emissions and the increase the use of renewable energy sources. In
addition social and economic structures will be encouraged to have a higher resilience to
future crises.

Depending on the scenario, the potential for the share of renewable energies in Styria is
estimated to be between 22% and 38%. The substitution of imported energy with domestic
products can lead to a revival of local value chains. Detailed points are given in the Climate
Protection Plan - Styria and in the Energy Strategy 2025. The Economic Strategy -Styria 2020
also contributes to the expansion of renewable energies. Innovations in environmental tech-
nology and as well as efficient use of energy and resources will be promoted under the
theme Eco-Tech. In other themes such as Mobility there will be a strong emphasis on "clean
technologies". This development is essential for sustainable social and economic structures.

For industry and energy sectors in Styria, subject to the EU emissions trading, the principle of
maintenance of competitiveness applies to Styrian economic policy as well as at the Euro-
pean level. The energy and climate policy should not provide incentives for the relocation of
business premises, but give security to locations by highlighting the promotion of innovative
climate protection technologies.

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Culture and quality of life

A diverse, internationally acclaimed, art and cultural scene stands for openness and enlight-
enment and is therefore a factor in quality of life. Traditional art and cultural activities, such
as opera, theatre, concerts, literature and art galleries, as well as a broad young independent
alternative scene are important for this. The fine interplay of these complex artistic and
cultural scenes is decisive to the development of a general climate of creativity in the region.
Such a positive creative climate in turn supports and fires the imagination and innovation
capability in society, and this should supported and further developed in Styria.

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8 Monitoring and Assessment of the Economic

Strategy
The implementation of the new economic strategy of Styria will be subject to continuous
monitoring and assessment, and evaluation of effectiveness. Through its area of activity in
EPIS ("Evidence-based Policy Information System") Department 14 – Economic Affairs and
Innovation will firstly conduct observation of the general economic development, secondly
the monitoring & assessment, and thirdly the evaluation of the implementation of the Eco-
nomic Strategy.

The economic development of Styria will be continuously reviewed as part of economic

monitoring. Through a joint dialogue there will be an exchange with partner organizations in
terms of economic estimates. It will be endeavored through forecasts to anticipate the
development of the Styrian economy.

In the context of the annual Economic Report the relevant authorities and Styrian Parliament
will be advised on economic development and business and regional development. "Macro
trends" in development in terms of growth, employment, export ratio, F&D and innovation
will be observed in order to obtain a picture of the overall structure of the economy and its
dynamics. This should take into account the fact that Styria is also dependent on many
external influences.

The evaluation of the implementation focuses on factors that can be influenced by the prov-
ince and especially by the Ministry for Economy, such as the number of new exporting com-
panies, or the number of establishments that put forward R&D or innovation proposals. It is
assumed that these changes have positive influence on the growth potential of Styria.

To further develop the strategy, Department 14 – Economic Affairs and Innovation will focus
on evaluation of the core strategies and themes. This allows for a comprehensive approach
that also includes developments in the economic climate. The described measures will en-
sure changing conditions are recognised and new challenges identified so that appropriate
operational measures can be determined.

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9 Summary: The Economic Strategy

in 120 Seconds
On European comparisons Styria has an excellent economic foundation. In the years of eco-
nomic boom it was able to position itself above the average for Austria in development of
GDP and employment figures.

However, globally and regionally the economic and financial crises have left their mark. Only
as a result of this, have much needed changes become visible. Highlighted in this develop-
ment are the rapid catch-up of emerging countries, the shift in bargaining power towards
these countries, the restructuring of global industrial value chains and the financial repercus-
sions of the crisis, not least in public budgets.

Thus, Styria is facing a new reality, new challenges and opportunities. In this country as in
other parts of the globalized economy it has led to a redefinition of industrial sectors and
thus the manufacturing conditions in the region. The knowledge society is not only important
in a few industries; it is experienced in all areas. Only through innovation, it is possible to
achieve the competitiveness that brings growth and employment. Following this crisis, we
expect this to be much stronger than previously was the case.

Moreover, globalization continues apace. It is not only trade that is spreading around the
world. Also production, research and development are more often conducted in different,
interconnected places. In fact observable economic development takes place today where
internationally competitive companies meet up with research and educational institutions
and thereby develop global leadership in technology and know-how. The Economic Strategy:
Styria 2020 builds on the strategy „Innovation as Standard „and on the strategy EU 2020. The
declared aim of the Styrian economic policy is: to make the region into a European bench-
mark for the transition to a knowledge-based manufacturing economy.

"Growth through Innovation" is therefore the guiding principle behind the strategy work in
Styria. Today, however, this demands a new understanding of growth. The concept incorpo-
rates new energy sources and alternative materials and even pursues innovative paths in the
service sector.

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In summary, ahead of Styria lie three distinctive strategic economic turning points: going
from eleven fields of strength to three key themes and technological core competencies,
from promotion to active location development, and from grants towards financing pack-
ages. Specifically, this means that the economic policy focuses strongly on the three themes:
Mobility, Eco-Tech and Health Tech. The creative industry has a crucial foundation function
and specifically supports the innovative climate of Styria. One focus is young enterprises with
growth opportunities. Another important goal is the aggressive internationalisation of the
region and Styrian companies. These in total will be supported through promotion of innova-
tion and appropriate training schemes.

To become a European benchmark for the design of the intelligent transformation towards a
knowledge-based manufacturing economy requires much more. Of great importance is the
increased mutual coordination with other policy areas that are relevant to economic devel-
opment and for the businesses of greatest importance to Styria: here in particular the areas
of education, science and energy are decisive.

The future competitive advantages of Styria will be the close linking with the scientific
community, the availability of a skilled workforce and the efficient use of resources. Besides
expansion of the service sector and of education and training, the targeted support of young
innovative companies is a central strategic objective.

Many of today's existing strengths of Styria will no longer be unique features in the future,
but will increasingly becoming international standards. The opportunity for the region is
therefore solely in the systematic development in the areas of research and of education and
training and of economic themes, that reflect both the traditional and new strengths of
Styria.

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