Scientific cooperation beyond the Iron Curtain
Fritz Nemschak, Director of the Austrian Institute of Economic Research (WIFO), was instrumental in founding wiiw. Nemschak was concerned that, in Austria, the economic situation in the communist countries was not being studied scientifically. To address this lacuna, he began recruiting like-minded colleagues in Belgrade, Budapest, Prague and Moscow, working towards his vision of East-West scientific cooperation.
In need of economic knowledge of Eastern Europe
Similar concerns were being voiced in the US, which had both a significant interest in, and a lack of economic data and research on, the strength of the communist economies. As the Soviet Union was the second superpower and the US’s main rival during the Cold War, its military strength relied heavily on its economic potential, making knowledge of its economy essential.
McGeorge Bundy’s Ford Foundation gets interested
It thus came as no surprise, when, in May 1967, McGeorge Bundy, President of the Ford Foundation in the 1960s and former National Security Adviser to US Presidents John F. Kennedy and Lyndon B. Johnson, called publicly for the establishment of an East-West research institute. This led to an exchange of letters on the topic with WIFO Director Franz Nemschak.
Department for East-West Studies within WIFO
The antisemitic repression in Poland and the entry into Prague of Warsaw Pact troops in August 1968 were to have a direct impact on Nemschak’s idea. Thanks to financial support from the Ford Foundation, refugee academics from beyond the Iron Curtain were able to remain in Austria. Nemschak favoured the idea of bringing guest researchers from both East and West together.
Seed funding by the Ford Foundation
In February 1969, Prof. Nemschak submitted an official request to the Ford Foundation in New York for partial funding to establish a new international centre for comparative systems research within WIFO. This request was ultimately approved, and the Ford Foundation provided USD 250,000 – a significant sum at the time – to set up this new institute at the turn of 1972/1973. This is what would later become wiiw.
Founding of the Vienna Institute for International Economic Studies
On 28 December 1972, the Department for East-West Studies within WIFO was transformed into an independent research institute, which initially operated under the name Wiener Institut für Wirtschafts- und Systemvergleiche, later becoming the Wiener Institut für Internationale Wirtschaftsvergleiche (wiiw). Austria’s government, the Austrian National Bank, the City of Vienna and other banks and banking associations became its major financiers. Furthermore, research projects had to be secured to obtain additional funding.
Fritz Nemschak: Director (1973–1978)
wiiw’s founding history
A 2023 study by historian Petra Mayrhofer explores the founding history of wiiw, its early research activities and its role in fostering East-West academic cooperation up to 1989, when the transformation process began in Eastern Europe following the end of communism. Particular emphasis is placed on the organisational structure of the cooperation and its lasting impact in the post-1989 period.
The true performance of the communist economies
During the last two decades of the Cold War, the institute focused on uncovering the true performance of the communist command economies of Eastern Europe. As one of the few research institutes globally to collect relatively reliable data on these countries, it carefully analysed macroeconomic indicators – despite significant challenges in obtaining accurate information from the COMECON countries, where statistics were often manipulated for political reasons to conceal the system’s weaknesses.
Friedrich Levčík: Director (1979–1983 and 1990–1991)
Gerhard Fink: Director (1984–1990)
First headquarters at Arsenal Objekt 20
In the early years, wiiw and WIFO shared a new building in the Arsenal, a former military complex in Vienna’s southeast. Its construction in 1969 was publicly financed, on the promise that WIFO would establish a research unit on Eastern Europe (later to become wiiw). The choice of location was not unconnected to the fact that Director Nemschak had his apartment in the Arsenal complex and his wife could easily bring his lunch to the office.
The fall of communism in Eastern Europe
The glaring lack of economic expertise on the communist Eastern Bloc states led many experts and politicians grossly to overestimate the economic power of the communist states. Not even in the 1980s did they come to realise those countries’ economic bankruptcy, which would ultimately lead to the collapse of the system and the end of the Cold War. wiiw, on the other hand, was well informed about the economically hopeless situation of the Eastern Bloc: thus did its assessments become world renowned.
From planned economy to market economy
The historical turning point of 1989, the consequences of which for Europe and the world were comparable only to the end of the Second World War in 1945, also marked a pivotal moment for the institute. Its new focus shifted to analysing and providing policy advice on the progress and pace of the transformation of the centrally planned economies of Eastern Europe into market economies.
This gave rise to the well-known debate – which also raged at the institute – between the proponents of shock therapy and those who advocated a gradual approach to privatisation, price liberalisation and the establishment of the institutions necessary for a market economy.
Kazimierz Łaski: Scientific Director (1991–1996)
Ingrid Gazzari: Executive Director (1991–2006)
Second headquarters on Vienna’s Ringstraße
In August 1994, the Vienna Institute for International Economic Studies moved to the Palais Lieben-Auspitz on Vienna’s Ringstraße, at Oppolzergasse 6, in the first district, where its offices were located above the famous Viennese coffeehouse, Café Landtmann. It remained there until 2009. The neo-baroque Palais was built between 1873 and 1874. It once housed Berta Zuckerkandl’s salon, a meeting place for intellectuals and artists such as Gustav Klimt, Gustav Mahler, Max Reinhardt, Arthur Schnitzler and Alma Mahler.
Towards EU enlargement
In the 1990s, the process of EU accession for the formerly communist countries of Central and Eastern Europe began, culminating in 2004 with the ‘Big Bang’ enlargement, when 10 countries joined the Union, eight of them from the region: Estonia, Latvia, Lithuania, Poland, Hungary, Czechia, Slovenia and Slovakia. Romania and Bulgaria followed in 2007, and Croatia in 2013.
The institute followed this accession process closely, providing analysis and policy advice. One notable initiative was the project Countdown, which focused on building a comprehensive economic knowledge base on these countries.
Michael
Landesmann:
Scientific
Director
(1996–2016)
Elisabeth
Hagen:
Executive
Director
(2006–2019)
wiiw moves its
headquarters to
Rahlgasse 3
In February 2009, the institute moved to a charming historic building on Rahlgasse in Vienna’s sixth district, close to the MuseumsQuartier and the city centre, where it has been based ever since. The house – which was constructed in 1900 on the site of the former city granary – was originally an administrative building for the municipal electricity company. Later on it housed the city’s transport company and the European Union Agency for Fundamental Rights.
Expansion of research areas
Beginning with the EU’s Eastern enlargement in 2004, the institute expanded its research to encompass a wide range of areas, including macroeconomics, international economics, labour markets, migration, income distribution, regional economic development and industrial development in Europe and beyond. Consequently, it became increasingly engaged in EU projects, reflecting its commitment to European integration and related analysis.
Robert Stehrer: Scientific Director (2016–ongoing)
Mario Holzner: Executive Director (2019–ongoing)
Russia’s invasion of Ukraine
In the wake of Russia’s illegal full-scale invasion of Ukraine in February 2022, the institute found its reputation enhanced both in academia and among the general public. The economic impact of the war on Ukraine, Russia and Europe generally has been a major feature of its work ever since. wiiw has been able to establish itself as one of the leading institutes on the economic consequences of the war in Europe. This has also been reflected in some prestigious research commissions.