Switzerland - Economic analysis of government policies, investment climate and political risk.






SWITZERLAND: Economic Policy Analysis

This site presents an analysis of the Swiss government's economic policies compared to a revised list of 34 economic policies as prepared by Sandra Joller with the McKeever Institute of Economic Policy Analysis (MIEPA) in Fall 2011.

To read the analysis scroll through this site. To learn more about the background policies, click here: Introduction and Policy Recommendations

To learn more about MIEPA, click here Return to MIEPA's Home Page

The study is by Sandra Joller, a Swiss native who currently [December 2011] lives in San Francisco; this study presents the Swiss government's economic policies as compared to the MIEPA list of policies as outlined above. The ratings herein are based on the following rating scale:


5.0 Perfect Facilitation of Wealth Creation
4.0 Midway between Perfect and Neutral
3.0 Neutral Effect on Wealth Creation
2.0 Midway between Neutral and Obstructionist
1.0 Perfectly Obstructionist to Wealth Creation
[Rating scale copyright Mike P. McKeever, 2011. Used herein with permission]

To read a disclaimer about the analysis in this file, scroll to the bottom of the file.

Return to MIEPA's Home Page





        1               4.5          13.5             15.0        90 %

        2               4.0          12.0             15.0        80

        3               4.0          12.0             15.0        80

        4               5.0          15.0             15.0       100

        5               4.8          14.4             15.0        96

        6               5.0          15.0             15.0       100

        7               4.5          13.5             15.0        90

        8               4.5          13.5             15.0        90

        9               4.0          12.0             15.0        80

        10              5.0          15.0             15.0       100

        11              4.5          13.5             15.0        90

        12              3.5           7.0             10.0        70

        13              4.4           8.8             10.0        88

        14              4.5           9.0             10.0        90

        15              1.5           3.0             10.0        30

        16              5.0          10.0             10.0       100

        17              5.0          10.0             10.0       100

        18              5.0          10.0             10.0       100

        19              4.5           9.0             10.0        90

        20              4.5           9.0             10.0        90

        21              3.0           6.0             10.0        60 

        22              3.5           7.0             10.0        70

        23              5.0          10.0             10.0       100

        24              5.0          10.0             10.0       100

        25              5.0          10.0             10.0       100        

        26              5.0          10.0             10.0       100

        27              2.0           4.0             10.0        40

        28              3.5           7.0             10.0        70

        29              3.7           3.7              5.0        74 

        30              5.0           5.0              5.0       100

        31              5.0           5.0              5.0       100

        32              3.5           3.5              5.0        70

        33              4.5           4.5              9.0        90

        34              3.0           3.0              5.0        60

   TOTAL              144.4         313.9            365.0        86.0%
                      =====        ======            =====        =====


1. Freedom from internal control: 4.5

The courts in Switzerland are fair and give people the right to contest and explain. The Swiss government respects the constitutional rights and freedoms of the people. Entrepreneurs and citizens can move freely within Switzerland and also abroad. Everybody is treated the same, and everybody has the same rights. There is no discrimination upon the basis of gender, race, political orientation, ethnic background, or religion. Everybody can participate in any activity they desire, as long as it isn’t against the law. Switzerland receives a high mark for this policy.

Sources: • The Federal Authorities of the Swiss Confederation http://www.admin.ch, 12/05/2011 ; • Human Rights http://www.humanrights.ch, 12/05/2011 ; • Personal information

2. Freedom of speech: 4.0

The Swiss Constitution guarantees Freedom of speech and Freedom of information for every citizen (Article 16). All the people have the right to freely express themselves. This includes freedom of opinion and the freedom to receive or communicate information or ideas without government intervention or consideration of borders. Other basic freedoms under the constitution include freedom of religion, freedom of peaceful assembly, and freedom of the press. The authorities observe and respect these basic rights. However, in 2009 there was the minaret controversy in Switzerland. This refers to construction of minarets; a referendum banned the construction of new minarets (57% of the participation voters approved). Because of this Switzerland receives only a medium score for this policy.

Sources: • Swiss Info http://www.swissinfo.ch, 12/05/2011 ; • The Federal Authorities of the Swiss Confederation http://www.admin.ch, 12/05/2011 ; • Wikipedia Schweiz http://www.wikipedia.ch, 12/05/2011 ; • Personal information

3. Effective, fair police force: 4.0

Crime in Switzerland isn’t high, but has increased in the past few years. In 2009 the police registered a total of 553,421 criminal offenses, which includes 51 killings and 185 attempted murders. There were 666 cases of rape, and 94,574 adults were convicted under Swiss criminal law, of which 57.3% were for traffic offences. In addition 5,064 minors were convicted. When we compare the crimes committed by Swiss citizens, versus the crimes committed by immigrants, the crime rate among resident foreigners is significantly higher. Immigrants from Angola, Nigeria, and Algeria have a crime rate of above 600% of that of Swiss population. Immigrants from the Balkan States, have crime rates between 210% and 300% of the Swiss value. However, people in general feel safe in Switzerland, and the police force is fair and effective. Switzerland receives a good score for this policy.

Sources: • Swiss Info http://www.swissinfo.ch, 12/05/2011 ; • Swiss Statistics http://www.statistik.admin.ch, 12/05/2011 ; • Personal information.

4. Private property: 5.0

Switzerland has one of the world’s best protection regimes for both foreign and domestic holders of intellectual property. The judiciary is independent, and contracts are secure. Switzerland’s laws that protect private property in conformance with local practices are nationally recognized. The laws are fully enforced in Switzerland. Property owning citizens and foreigners have clear and protected rights. Switzerland has signed the Paris Convention for the protection industrial property. In addition to this, Switzerland has signed the Patent Cooperation Treaty of 1970, the International Patent Classification Agreement of 1971, and the European Patent Convention of 1973. Switzerland is a signatory to the Bern Convention of 1908. Switzerland has also signed the Universal Copyright Convention of Geneva of 1952 and declarations of reciprocity were exchanged between Switzerland and the U.S. in 1924. Switzerland is also the head of and a major player in, the World Intellectual Property Organization (WIPO). This country has a very good protection for private property. The country’s laws protect private property rights, and the government enforces those laws. Switzerland receives a high score in this policy.

Sources: • Global Property Guide http://www.globalpropertyguide.com ; • WIPO, World Intellectual Property Organization http://www.wipo.org, 12/05/2011 ; • 2011 Index of Economic Freedom http://www.heritage.org, 12/05/2011 ; • Personal Information

5. Commercial banks: 4.8

The Swiss Financial Market Supervisory Authority (FINMA) regulates all banks in Switzerland. The banking sector in Switzerland is one of the world’s best. The UBS and Credit Suisse are the largest and second largest banks in Switzerland, whereas the UBS is the second largest bank in the world. Swiss banks are highly trusted; anybody uses it for cash deposits and investments. The commercial banks are always ready to support businesses and individuals with loans. In addition, the Swiss bank secrecy protects the privacy of bank clients. The right to privacy is a fundamental principle in Switzerland. However, during the crisis Switzerland was forced to give out information to the United States, which made many believe that they can’t trust Swiss banks anymore. Because of this little incident, Switzerland doesn’t receive the high score for this policy.

Sources: • UBS, Union Bank of Switzerland http://www.ubs.com, 12/05/2011 ; • Credit Suisse https://www.credit-suisse.com, 12/05/2011 ; • Handelszeitung http://www.handelszeitung.ch, 12/05/2011 ; • Personal information

6. Communication systems: 5.0

Switzerland is a country that can communicate. There are many newspaper and magazines that are wide spread. In addition to this, there are 4.488 million main telephone lines in use, 9.475 cell phone lines in use, 4.816 million Internet hosts, and 6.152 million Internet users, which are big numbers for a small country like Switzerland. The telephone system in Switzerland has excellent domestic and international services. Switzerland also has radio broadcast stations, two short-wave stations, 108 television broadcast stations, 115 Internet Service Providers (ISPs). Most households have phone, radio, and televisions. Switzerland is the country with the most iPhones sold in percentage to its population; 7.8% of Switzerland’s population owns an iPhone. This is more than any other country. Therefore Switzerland receives a high score in this policy.

Sources: • ApfelBlog http://apfelblog.ch. 12/05/2011 ; • Central Intelligence Agency - The World Factbook https://www.cia.gov, 12/05/2011 ; • Personal Information

7. Transportation: 4.5

When we compare public transportation in Switzerland to other countries, Switzerland is clearly up front; public transportation infrastructure is known as one of the best in the world. With its size of 41,285 km2, Switzerland isn’t not big at all, therefore one can get from one side to the other side of Switzerland in only a few hours. However, this is only possible because Switzerland has such a good public transportation system. There is a rail network of 5,063 km. Switzerland has trains, buses, trams, metros, or boats that bring a person to a destination. Switzerland also is a member of the International Union of Railways, which is an international rail transportation system. Switzerland has a good transportation system, but it is very expensive to use it. Therefore Switzerland doesn’t receive a perfect score for this policy, but still a good score.

Sources: • Wikipedia Schweiz http://www.wikipedia.ch, 12/05/2011 ; • Swiss Statistics http://www.statistik.admin.ch, 12/05/2011 ; • Personal information

8. Education: 4.5

Education in Switzerland is of high quality, and everybody can get an education of they want to. The education system in Switzerland is different from other countries. The compulsory education spans 9 years; 6 years of primary schooling and 3 years of secondary schooling. After these 9 years of schooling, you do either high school, which takes 4 years, or you do an apprenticeship, which takes 3 or 4 years. Switzerland has the highest percentage of people in apprenticeships. After apprenticeship you can do one year of full time education, so these people are on the same education level as the ones who did high school. Now they can enter a University. The literacy rate in Switzerland for men and women is 99%. The percentage of children enrolled in secondary schools is 87.9%. Education in Switzerland is of high quality and available to all. Switzerland is renowned for its technology, business, hotel management, and science higher education schools and universities. Switzerland receives a high score in this policy.

Sources: • Swiss Statistics http://www.statistik.admin.ch, 12/03/2011 ; • Nation Master http://www.nationmaster.com, 12/03/2011 ; • Personal information

9. Social Mobility: 4.0

In Switzerland all citizens are treated the same. Everybody has the right to get an an education, weather their parents are rich or poor. Kindergarten until University can be attended for free, so the poor families can still send their kids to school. For financially unstable families, the government pays for tuition, books, transportation, and even meals. Even though, everybody is treated the same, when it comes to getting a job, a child with a rich dad probably has the better chances to get the job than a child with poor parents, even when both of them are qualified. In addition to this, many children do not want to earn their Masters degree if their parents haven’t even finished high school. Children mostly follow their parents path. Therefore children with high educated parents are likely to get a Master’s degree. Switzerland receives a relatively high school in this policy.

Sources: • Schweizerische Konferenz der Kantonalen Erziehungsdirektoren http://www.edk.ch, 11/30/2011 ; • Personal information

10. Freedom from outside control: 5.0

Switzerland is not a part of the European Union, and it will probably stay this way. Recently there was a voting about it, and it got denied. Therefore the government is free from outside regulations, and the Swiss citizens are free from control of any foreign government; they only have to follow the laws in the country as long as they stay in the country. Because Switzerland is absolutely free from outside control the country receives a high score.

Sources: • US Department of State http://www.state.gov, 11/30/2011 ; • Schweizerische Eidgenossenschaft http://www.admin.ch, 11/30/2011

11. Protection of Domestic Enterprises: 4.5

Switzerland has a current account surplus of 20.28 billion Swiss Francs. This means Switzerland has more exports than imports. Trading goods and services has become very important in Switzerland. Switzerland’s main exports are, medicinal and pharmaceutical products, watches and clocks, and machinery. The main imports are chemicals, vehicles, metals, machinery, and agricultural products and textiles. European Union is Switzerland’s largest trading partner accounting for about 62% of exports and 79% of imports. Since Switzerland has an account surplus, it receives a relatively high score for this policy.

Sources: • Trading Economics http://www.tradingeconomics.com, 11/30/2011 ; • The World Factbook https://www.cia.gov, 11/30/2011 ;

12. Foreign currency transactions: 3.5

The official currency in Switzerland is the Swiss Franc (CHF). Since the Euro surround Switzerland use the Euro, one can use the Euro at many restaurants or store. However, all foreign currencies must be converted into the national currency for business use in Switzerland; business transactions are always performed using the national currency. The Swiss Franc is a strong and stable currency controlled by the Swiss National Bank (SNB). Switzerland receives a middle score, because of the influence that the Euro has now.

Sources: • Independent Commission of Experts in Switzerland (ICE) http://www.uek.ch, 11/30/2011 ; • Swiss National Bank (SNB) http://www.snb.ch, 11/30/2011 ; • Personal information

13. Border control: 4.4

The Swiss government definitely has strong borders. Switzerland is surrounded by Germany, Austria France, Lichtenstein, and Italy. However it is not part of the European Union (EU), which means it controls its own borders. The Border Guards work close with the Federal Office of Police (fedpol), the Federal Office of Migration (FOM), or the cantonal police services. Switzerland wanted a more secure Europe by joining the Schengen agreement, which makes travelling in the Schengen area easier without compromising security. However, Switzerland is not a member of the European Union, and therefore not in the European Customs Union either. Because of this the Border Guards still continue the customs controls for Switzerland. Switzerland receives a high score for their border control.

Sources: • Eidgenössische Zollverwaltung EZV http://www.zoll.admin.ch, 11/30/2011 ; • Swiss Federal Customs Administration http://www.ezv.admin.ch, 11/30/2011 ;

14. Currency: 4.5

Switzerland has one official currency, which is the Swiss Franc (CHF). Since the Euro exists, one can pay in Euros at many restaurants or shops in Switzerland, even though it’s not an official currency of Switzerland. The Swiss Franc has always been strong over the year. In 2010/2011 when the economy crashed, the Swiss Franc has gotten too strong, so the Swiss National Bank (SNB) had to intervene, and set a maximum value of 1.20 CHF for 1 Euro. The Swiss National Bank is not controlled by the government, but can be influenced by it. The country receives a high score in this Policy.

Sources: • Personal Information

15. Cultural, language homogeneity: 1.5

Switzerland is such a small country, and yet it’s got four official languages. 63.7% of Switzerland’s population speaks German, 20.4% speaks French, 6.5% speaks Italian, and 0.5% speaks Romansch. In the north part of Switzerland, close to Germany and Austria, people speak German, whereas in the part close to France people speak French. In the south, next to Italy, people speak Italian, and the fourth official language of Switzerland, Romansch, is only spoken in the canton Graubünden, which is in the east where it borders on Austria and Italy. The canton Graubünden is biligual; everybody who knows Romansch, also knows German. Switzerland also has some cultural differences in the country. German speaking people have adopted the German culture, French speaking people have adopted the French culture, and the Italian speaking people have adopted the Italian culture. In addition to these language and cultural differences, Switzerland is a country that welcomes foreigners, therefore about 22% of the Swiss population are immigrants and refugees. This means there are even more languages quite commonly spoken. However, the culture and language barrier never results in serious conflicts. Everybody speaks English and at least two of the countries official languages, so problems can be solved easily and peacefully. However, Switzerland does not receive a good score in this policy.

Sources: • Schweizerische Eidgenossenschaft http://www.admin.ch, 11/30/2011 ; • Wikipedia Schweiz http://www.wikipedia.ch, 11/30/2011 ; • Personal information.

16. Political effectiveness: 5.0

Switzerland has quite a unique democratic tradition. Governments, administrations, parliaments and courts are organized on 3 political levels, such as federal, cantonal, and communal levels. Since there many different small governments, they can react and solve problems immediately without being overextended. Everywhere people have access to government information. The political system is very good organized, people are allowed to make changes to anything by using the 100’000 signature referendum. Therefore the political effectiveness is high, and Switzerland receives a high score.

Sources: • The Swiss Parliament http://www.parliament.ch, 11/30/2011 ; • The Federal Authorities of the Swiss Confederation http://www.admin.ch, 11/30/00 ; • Personal Information

17. Institutional stability: 5.0

The Swiss government has a representative democracy, and is very stable. The Federal Council, which was instituted by the 1848 Federal Constitution, consists out of seven members, one from each leading party. It’s always been the same system since 1848. The Swiss courts are very stable too; there are federal and cantonal courts. The first court to go is always the cantonal (state) court, if you disagree with its decision, you may go to the federal court. The court system in Switzerland is very good organized. Switzerland’s education standard has always been high, and it still is. Many Swiss schools are internationally acclaimed. In 2011 the Swiss Franc became almost too high, so the exports have been suffering a lot. However, the Swiss National Bank lowered the value of the Swiss Franc and enacted a new law that says the Swiss Franc can never be higher than 1.20 Euro. Therefore the exports don’t have to suffer anymore, and the watch, food, and pharmaceutical industries are still well off, and they can continue their traditions. Switzerland is a very stable country, so it receives a high score in this policy.

Sources: • The Federal Authorities of the Swiss Confederation http://www.admin.ch, 11/30/00 ; • Historisches Lexikon der Schweiz http://www.hls-dhs-dss.ch, 11/28/2011 ; • Wikipedia Deutsch http://www.wikipedia.com, 11/28/2011 ; • Personal information.

18. Honest government: 5.0

Switzerland has a great and very honest government; it’s got a representative democracy. The Federal Council has seven members, who serve as the Swiss collective head of state. The seven members are elected by the Federal Parliament. Each one of them is responsible for one of the seven federal executive departments. In Switzerland the presidency rotates each year; one of the seven gets elected by the United Federal Assembly as President of the Confederation. The system in Switzerland is very good and is nowhere else in the world to find like this. Ministers from all the leading parties sit in the Council, which leads to many opposing opinions. However, they have to accept any decision taken by the group, and this is why the system works. The Swiss government is definitely very honest; therefore Switzerland receives a high score in this policy.

Sources: • The Federal Authorities of the Swiss Confederation http://www.admin.ch, 11/28/2011 ; • Historisches Lexikon der Schweiz http://www.hls-dhs-dss.ch, 11/28/2011 ; • Wikipedia Deutsch http://www.wikipedia.com, 11/28/2011 ; • Personal Information

19. Common Laws: 4.5

In Switzerland everybody is equal in the eyes of the law. Everybody is treated the same, and this is not just an idea how it should be; this is the way the Swiss live in their country. The Swiss constitution describes the basic rights. The Council of States and the National Council represent the legislation of Switzerland; this is very similar to the system in the United States. Switzerland has the federal level and the cantonal (state) level of law. Each citizen has the same legal rights and has to follow the same laws the the federal level. The laws on the cantonal level differ from canton to canton (state to state), but each citizen in the same canton has to follow the same laws. The federal law is always stronger than the cantonal law, a canton is not allowed to enact a new law that conflicts with the federal law. Switzerland receives a high score for this policy, because it doesn’t matter if a person is rich or poor, everybody is treated the same.

Sources: • The Federal Authorities of the Swiss Confederation http://www.admin.ch, 11/28/2011 ; • The Swiss Parliament http://www.parlament.ch, 11/28/2011 ; • International Center for Asset Recovery http://www.assetrecovery.org, 11/28/2011

20. Central Bank: 4.5

The Swiss National Bank (SNB) is the central bank of Switzerland. It is responsible for Swiss monetary policy and for issuing Swiss franc banknotes as an independent central bank. The Swiss National bank manages the country’s commercial banks and monetary policy effectively, and is independent of political control. However, the SNB does not have the good reputations anymore. With the crisis also the SNB is struggling. Our economy is too good, which is why the swiss franc became too strong. So the Swiss National Bank (SNB) has set a minimum exchange rate target of SFr1.20 to the euro. In my opinion this is a good solution, and I am very positive this is going to work out good. The National Bank is required by the Constitution to act and make decisions that benefits the interests of the country as a whole. Other responsibilities include the management of commercial banks, ensuring the monetary supply, investment of currency reserves, and the stability of the financial system. Even though the SNB’s reputations is not as good as it once was anymore, the SNB still does a good job, so Switzerland receives a good score.

Sources: • SNB, Swiss National Bank http://www.snb.ch, 11/21/2011 ; • EBK, Swiss Federal Banking Commission http://www.ebk.admin.ch, 11/21/2011 ; • Wikipedia Schweiz http://www.wikipedia.ch, 11/021/2011

21. Domestic budget management: 3.0

Switzerland has a budget surplus of 0.7% of GDP in 2010, which places Switzerland 36th in the word chart. The revenue for 2010 was $185.7 billions, the expenditures were $182.3 billion, which includes federal, cantonal, and municipal accounts. Inflation must be controlled, and Switzerland is doing a great job with this. It is almost impossible to achieve zero percent, so an inflation rate of 0.7% in Switzerland in 2010 is pretty good. Switzerland has taxes and other revenues of 35.5% of GDP. Switzerland is not managing its domestic budget perfectly, but good. It therefore receives a medium score.

Sources: • Organisation for Economic Co-Operation and Development http://www.eocd.org, 11/21/2011 ; • Central Intelligence Agency - The World Factbook http://www.cia.gov, 11/21/2011 ;

22. Government Debt: 3.5

Switzerland is not excessively indebted. The value of its national debt in 2010 is about 210 billion CHF. This is about 38.4 percent of GDP, which means the amount of debt is still acceptable. Once a country’s dept is more than 50 percent of GDP, it’s excessively indebted. Furthermore, Switzerland has external debt (debt in foreign currency) of 1.2 trillion USD. This places Switzerland 79th in the world chart. But Switzerlands federal dept is about to go downwards; the country is working on it. Since Switzerland once had not much debt, it does not receive the highest score for this policy, but still it receives a good score.

Sources: • Swiss Statistics http://www.statistik.admin.ch, 11/21/2011 ; • Central Intelligence Agency - The World Factbook http://www.cia.gov, 11/21/2011 ;

23. Economic statistics: 5.0

Switzerland produces accurate and plentiful statistics. A statistic about almost anything related to economy is provided from the government. On the website of the Swiss Federal Statistical Office, the statistics are available for everybody. Switzerland receives a high score for this policy, because the statistics are always accurate.

Sources: • Swiss Statistics http://www.statistik.admin.ch, 11/09/2011

24. Protection of public health and safety: 5.0

Switzerland has a very good protection of public health and safety. It’s got a good management and regulation of waste, and the food inspection in Switzerland is equivalent to the United States, which is very good as well. The Swiss Federal Office of Public Health (FOPH) makes infectious disease control in collaboration with the cantons, international health authorities and partners. There is a very good system in Switzerland. The life expectancy in Switzerland is 80 years for men, and it is 84 years for women. The infant mortality is very low at an average of 3.75 deaths per 1000 births in the years 2005 to 2010. Switzerland definitely has one of the world’s best medical and public heath infrastructures, and therefore the country receives a high score for this policy.

Sources: • Swiss Federal Office of Public Health http://www.admin.ch/bag, 11/07/2011 ; • World Health Organization (WHO) http://www.who.int, 11/07/2011 ; • Bundesamt für Statistik http://www.bfs.admin.ch, 11/07/2011 ; • Swiss Tropical and Public Health Institute http://www.swisstph.ch, 11/07/2011 ;

25. High wage policy: 5.0

Switzerland consistently ranks high on quality of life indices, such as per Capita income, which was $66’367 in 2010. Even though a normal workweek has 42 hours in Switzerland, and the Swiss don’t have as many vacation days as most of the European countries, it’s worth it to work in Switzerland. An average single working person who is not a professional can afford an apartment and vacation. Therefore Switzerland receives a high score in the high wage policy.

Sources: • US Department of State www.state.gov, 10/24/2011 ; • Swissworld www.swissworld.org, 10/24/2011

26. Environmental protection 5.0

Switzerland knows that the environmental regulations protect the quality of life and the value of real property. To keep Switzerland´s environment clean has always been priority. The confederation protects the Swiss population from exposure to noise, harmful substances, non-ionising radiation and natural hazards. Also it has the duty to keep the natural necessities of life such as land, water, air and forest. The Federal Office for the Environment FOEN is responsible for implementing the environmental policy. The principles of the environmental policy has been changed over the years. The focus is now on more personal responsibility, Information, global thinking, damage gets paid by the pulluter, and on the prevention, since it’s better than cure. The infrastructure in Switzerland is highly efficient. Therefore it receives a high score.

Sources: • Eidgenössisches Departement für Umwelt, Verkehr, Energie und Kommunikation http://www.uvek.admin.ch, 10/01/2011 ; • Personal Information

27. Strong army: 2.0

Switzerland is a neutral country and won’t take part in any war, unless it gets attacked. If this were the case, Switzerland is prepared with a small but strong Army. Its defense strategy is security through cooperation with the world’s main powers. It´s got big mountains which makes it difficult to invade, so the boarders are almost non-penetrable. The available manpower in Switzerland is theoretically about 1.85 million, which is approximately 23% of the country’s population. However, realistically the army is designed for about 100’000 men, i.e. budget, material, etc. Men between 16 and 49 are active, yearly trained participants of the Swiss Army, but the small size of the country makes its army inefficient against threat from large countries. The total costs of the Swiss army adds up to about five billion Swiss Francs, which is about 1’150 Swiss Francs per capita. The costs of the army management is about five billion Swiss Francs as well, which gives us a total of ten billion Swiss Francs. Ten billion Swiss Francs out of 333 billion Swiss Francs equals 3%. Since the cost of forces is therefore below one-third of the domestic budget, Switzerland receives a low score.

Sources: • Eidgenössisches Departement für Verteidigung, Bevölkerungsschutz und Sport http://www.vtg.admin.ch, 10/01/2011 ; • Personal Information

28. Foreign trade impact: 3.5

Switzerland is a very small country, for it relies on foreign trade. The annual trade balance is constantly a deficit, owing to the economy's reliance on large quantities of imported raw materials for industry. The export goods are divided into two categories, which are machinery sold to other manufacturers, and goods used by consumers. The country exports a large number of the world's watches and clocks. In 2009 Switzerland had a total foreign trade account of about 60% import and export of the GDP. This means that more than half of the Swiss economy is foreign trade. Switzerland is dependent on foreign countries. A recent example for this is when the UBS became very unsure of itself; the country was forced to help, so that not the entire economy suffers from this. There was introduced a new law “too big to fail” to force the banks to have at least 19% capital contribution. Switzerland receives a middle score.

Sources: • The Heritage Foundation http://www.heritage.org, 10/01/2011 ; • Encyclopedia of the Nations http://www.nationsencyclopedia.com

29. Management of foreign currency budget: 3.7

The total imports in 2009 were 157.9 billion Swiss Francs. Its main import partners for machinery, chemicals, vehicles, metals; agricultural products, textiles are Germany, Italy, France, USA, Netherlands, Austria, and UK. The total exports of goods and services in 2009 were 173.2 billion Swiss Francs. Its main export partners for machinery, chemicals, metals, watches, agricultural products, are Germany, USA, Italy, France, UK, Spain, and Netherlands. The positive balance of 15.3 billion Swiss Francs equals 2.8% of the GDP. Therefore Switzerland does not receive a perfect score; however Switzerland’s imports and exports are still well balanced. Switzerland has one of the world’s most stable economies. The Swiss National Bank is trying to keep the Swiss Franc stable to allow companies trading internationally. Recently it has announced to not let the currency exchange rate fall below 1.20. This makes the currency speculation difficult in Switzerland, yet it guarantees stability and somewhat good basic export conditions.

Sources: • Bundesamt für Statistik http://www.bfs.admin.ch, 10/01/2011 ; • Wikipedia http://www.wikpedia.ch, 10/01/2011 ; • Personal Information

30. Layers of collective action: 5.0

The way for the creation of Switzerland has been paved on September the 12th 1848. The three primary cantons Uri, Schwyz, and Unterwalden swore to stay together in defence against outside forces. Then they created a federal constitution. The constitution was influenced by the US Constitution. It was modified several times and fully replaced in 1999. The constitution represents that the Swiss have now a strong central government instead of a collection of independent cantons bound by treaties. Switzerland is now structured in three political layers; the federal government, the cantonal government, and the municipal government. The federal level is responsible for everything that is part of the federal constitution; such as foreign, security, customs and monetary policies. The next lower level, the cantonal governments are responsible for other issues that are not part of the federal constitution. There are 23 cantons and 3 half cantons, which have their own constitution, parliament and courts. The cantons are mainly responsible for the execution of the federal laws in the accordant cantons. Each canton has different municipalities, which are the smallest government division in Switzerland. Currently there is a total of 2’596 municipalities in Switzerland. These municipalities fulfill tasks for the federal level and the cantonal level, but they also have specific tasks for education, social welfare, energy supply, road building, local planning, taxation, etc. The local authorities are elected locally, they are self-regulated, and not dependent on the central government for funding or appointed officials. Switzerland receives a high score in this policy.

Sources: • Die Bundesbehörden der Schweizerischen Eidgenossenschaft http://www.admin.ch, 10/01/2011 ; • Personal Information

31. Pro business climate: 5.0

Switzerland has a good education system that allows anyone, even people with low income, to educate themselves. The costs are mostly covered by the government. About 22 percent of the total population is foreigners who fill most blue-collar positions. We are dependent on those people to meet the demand for less qualified labor. Therefore Swiss citizens tend to get a higher education and obtain managerial positions, which are also very good paying. The pro business climate in Switzerland is very good. People are socially accepted, and to make sure this stays like this and nobody assumes you were a criminal when you get introduced to a business owner, the free movement of travelers was introduced with the United States and the European Union. Each EU citizen has the option to work in Switzerland. The good basic economic conditions, such as low taxes, high education standard, labor peace etc, lets Switzerland be very attractive as a business location, mainly for new enterprises.

Sources: • Bundesverwaltung http://www.bfs.admin.ch, 09/18/2011 ; • Wikipedia / Schweiz http://www.wikipedia.ch, 09/18/2011 ;

32. Government enterprises: 3.5

There is a strong tendency in Switzerland to the privatization of government enterprises. Today there are only a few enterprises still fully or partly owned by the Swiss government. These enterprises include SBB, Post and SUVA. There are also a few corporations which are majority-owned or otherwise controlled by the Swiss government; such as Swisscom, RUAG, and NOK. Most of them are quite successful and self-sufficient, except from the public transport sector. SBB/CFF/FFS Cargo (freight traffic) loses money every year, and that 40 percent of the sales are made in Euros is not helping right now. The Euro exchange rate has fallen in value within two years from CHF 1.60 to CHF 1.20. Even though Switzerland has one of the best transportation system, it associates with high costs for the government.

Sources: • Basler Zeitung (Newspaper) http://www.bzonline.ch, 09/18/2011 ; • SBB/CFF/FFS (Swiss Railways) http://www.sbb.ch, 09/18/2011 ; • Die Bundesbehörden der Schweizerischen Eidgenossenschaft http://www.admin.ch, 09/18/2011 ;

33. International security agreements: 4.5

Switzerland has concluded international social security agreements with 44 countries to date. The objectives of these agreements are: guaranteeing the equal treatment of citizens from the contracting States, the determination of the applicable legislation, and the payment of social security benefits abroad. Switzerland has many advantages that provide a secure environment. It is a neutral country and won’t take part in a war, unless it gets attacked. If this were the case, Switzerland is prepared with a small but strong Army. Another advantage for Switzerland is that it’s got big mountains which make it hard to invade. Switzerland is known as one of the friendliest countries. A keystone for high security is the general stability of the country, such as labor peace, clear and stabile political conditions, a low unemployment rate (2.8%), low national dept, etc. Any disturbances inside the country or in coherence with other countries are therefore inprobable.

Sources: • Bundesverwaltung http://www.bsv.admin.ch, 09/18/2011 ; • Personal Information

34. Protection of domestic enterprises from government mandated costs: 3.0

In 1995, Switzerland adopted a new legislative act to include tax breaks and investment credits for small and mid-size companies. The new law has been enacted to compensate for the strict safety and environmental regulations and high labor costs. On the other hand the high production standard (quality, security of supply) is an advantage for Swiss companies; it’s worldwide recognized for it is worth to pay the extra cost. However, Switzerland’s attractiveness as an investment location is waning. An increasing number of companies are considering leaving Switzerland and relocating their operations abroad. The attractiveness is not waning because of a change for the worse in fiscal and infrastructural basic conditions, but rather because of the competition of emerging economies; such as India, China, or Russia. An other reason is the strong Swiss franc. The export economy is strongly affected by the strong Swiss franc. Since the EU countries, which are Switzerland’s most important trading partners, have high national debts, the Swiss products have a prohibitive price for other countries. Switzerland hopes that the bad exchange rate will recover. Furthermore the national bank intervenes by buying Euros, so the amount of Swiss Francs will get higher. The national bank in Bern guarantees an exchange rate of CHF 1.20. Switzerland has done nothing wrong, quite the contrary; the fact that Switzerland is established a good economy will now be fatal. However, one out of three foreign companies sees Switzerland in the future as the global center for top quality premium rate services. The long-term attractiveness of Switzerland as an investment location is excellent.

Sources: • Ernst & Young http://www.ey.com/CH/de/home, 09/15/2011 ; • Die Bundesbehörden der Schweizerischen Eidgenossenschaft http://www.admin.ch, 09/15/2011


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