Gerald D. Feldman argues for a stronger orientation towards the market.

In contrast to Germany or the Anglo-American countries, in Austria the state historically has had a big influence on the industrial financing. Usually, financial institutions have been – at least partially – state owned.' This was mentioned by Gerald D. Feldman, Professor for history at the University of California, Berkley, on June 6, 2006 at a conference on 'Industrial Financing, yesterday-today-tomorrow.' The reason for this event was the concurrent exhibition 'Rebuilding Austria – Reconstruction and the Marshall Plan', which had been sponsored by Austria Wirtschaftsservice/ERP Fund and the Austrian Marshall Plan Foundation.

How important is the capital base?
Gerald D. Feldman made clear, how important it is for Austrian companies to adapt themselves to market rules – an indispensable precondition for success in global competition. Klaus Gugglberger, member of the board of Investkreditbank AG, did not share the opinion of Feldman. He pointed out that Austrian corporates earned a lot and had a wide range of possibilities to raise capital for investments. 'A large capital base and enough money to invest in research and development provide the necessary base for entrepreneurs to expand', added Wolfgang Plasser, chief financial officer of Pankl Racing Systems AG, a company with an equity ratio of 50 per cent and R&D expenses of 15 per cent and quite content with the local circumstances.

Another item discussed was Basel II. The main purpose of Basel II – defining different prices according to credit risks – is the right approach, said Ewald Nowotny, at that time Head of the Institute for Economic Theory and Policy, Vienna University of Economics and Business Administration. But Basel II, said Nowotny, is only part of the current development. The European continental system has to be transformed – within the limits of European rules – into a system of Reduce public influence!

Gerald D. Feldman argues for a stronger orientation towards the market. capital market financing. In such a case, small and medium sized enterprises might have difficulties to get credit, however, and tendencies for concentration would rise.

For Stefan Pichler, Head of the Institute for Banking, Vienna University of Economics and Business Administration, Basel II is a challenge for the banks to measure and evaluate risks of their clients to avoid instabilities like they faced during the 1920s and 1930s.

ERP money helps a lot
The ERP Fund provides the economy with subsidized loans with the goal of improving the structure of the Austrian economy. 'By supporting production of a high technological level we try to push growth and employment', said Peter Takacs, CEO of austria wirtschaftsservice/ERP Fund. The European Recovery Program (ERP) contributed a lot to industrial financing during the late 1940s and 1950s and is still at work.

More than one billion dollar
The reconstruction of the Austrian economy after World War II was closely connected with the Marshall Plan. In 1947, US Secretary of State George Marshall initiated a common European project. All countries involved in this project were to receive a generous financial allowance from the USA. Under the European Recovery Program the Austrian economy acquired commodities worth more than one billion dollar, which were not to be paid back. The institution of ERP Fund in Austria was established in 1962. The fund assets consist of the donations of the Marshall Plan made until now. For the Austrian economy, ERP subsidies are still very important and highly appreciated.