The Austrian economy is based on a balance of private and public enterprise. All the basic industries were nationalized in 1946; these included all oil production and refining; the largest commercial banks; and the principal companies in river and air transportation, railroad equipment, electric machinery and appliances, mining, iron, steel, and chemical manufacturing, and natural-gas and electric power production. However, government control was reduced through privatization efforts in the late 1980s and early 1990s, allowing for the sale of shares in many nationalized companies to private investors. Over the years, Austria maintained close ties with the countries of Eastern Europe. Since the collapse of Communism in those countries in the late 1980s and early 1990s, more than 1,000 Western companies have chosen Austria as their base for new Eastern European operations.

In 1946 and 1947 the Austrian parliament enacted legislation that nationalized more than 70 firms in essential industries and services, including the three largest commercial banks, such heavy industries as petroleum and oil refining, coal, mining, iron and steel, iron and steel products (structural materials, heavy machinery, railway equipment), shipbuilding, and electrical machinery and appliances, as well as river navigation. Later reorganization reduced the number of nationalized firms to 19 and placed the property rights with limited powers of management and supervision into a holding company owned by the Republic of Austria, the Österreichische Industrieverwaltungs-Aktiengesellschaft (ÖIAG; Austrian Industrial Administration Limited-Liability Company). In 1986–89 ÖIAG was restructured to give it powers to function along the lines of a major private industry, and it was renamed Österreichische Industrieholding AG. The company is largely shielded from political intervention, and it is the largest single component of the Austrian economy, accounting for an annual turnover of more than 150 billion Austrian schillings per annum in the early 1990s

Austria with its well-developed market economy and high standard of living is closely tied to other EU economies, especially Germany's. Membership in the EU has drawn an influx of foreign investors attracted by Austria's access to the single European market and proximity to EU aspirant economies. In 2000, Austria moved to further cut government spending and raise taxes to meet EMU deficit targets after facing unexpected difficulties in reducing the public deficit. To meet increased competition from both EU and Central European countries, Austria will need to emphasize knowledge-based sectors of the economy and continue to deregulate the service sector. Growth is expected to remain at about 3% in 2001.