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Home / Latest News / Switzerland’s real success story is not chocolates or cuckoo clocks but its economy

Switzerland’s real success story is not chocolates or cuckoo clocks but its economy

Last Tuesday evening, one of our leading legal firms held what turned out to be a highly informative event in Cardiff at which the book Swiss Made – The Untold Story Behind Switzerland’s Success was formally launched in Wales.

As a guest of Capital Law, its author, James Breiding, took the audience on a roller coaster ride through the economy of this small and successful nation that many of us might have thought was only famous for watches, banking and chocolates.

While he did suggest that the Swiss success story did begin with milk – apparently the high altitudes are conducive to cows – it has developed into something that is now far more substantial both in terms of its global reach and industrial impact.

It is incredible to think that a country with a population of just over eight million people is home to 15 of the world’s 500 biggest companies, more than other European countries such as Netherlands and Spain or new economic powerhouses such as South Korea and Brazil.

The World Economic Forum also rates Switzerland as the most competitive nation in the world today, and only this week it was rated number one on the Global Innovation Index compiled by Cornell University and the top French business school, Insead.

This high level of competitiveness and innovation is having a direct impact on the economy – the GDP per head is amongst the highest in the world and unemployment is only 3% of the working population.

Naturally, the author examined various factors that had led to this incredible economic success story, including an egalitarian society, the importance of communities, a lean government, a superb public education system, investment in apprenticeships and efficient public transportation.

But the one that ran through his entire presentation was the Swiss proclivity towards globalisation long before the word was invented.

This is best demonstrated by the attitude towards immigration, with Switzerland becoming a haven for those persecuted in their own countries, such as the Huguenots in France who ended up establishing the foundations for today’s banking, watchmaking and pharmaceutical industries.

In fact, two of Switzerland’s most famous companies were not started by local businesspeople but by immigrants from other countries.

Heinrich Nestlé came to Switzerland from Germany to set up what is now the biggest food company in the world, while Nicolas Hayek emigrated from Lebanon to create the Swatch brand and single-handedly rescue the watch industry in his adopted country.

Indeed, such openness has certainly contributed to making Switzerland an attractive location for multinationals. For example, Google has recently established its largest research base outside of the USA in the country, while the largest European branch of IBM research is located in Zurich.

This openness is also reflected in its universities. Seven are ranked in the top 200 in the world and have some of the highest proportions of international students of any higher education institutions in Europe.

The importance of knowledge to the economy is also reflected in the fact that Switzerland has the highest number of Nobel Prize winners per capita in the world.

Of course, it could be argued that Switzerland’s stance on neutrality has also helped its economic position, especially during the Second World War when Swiss companies, especially banking, took advantage of war torn Europe.

However, this fails to explain why Switzerland has excelled in a range of industries over the last two decades, and the populist view of many of the Swiss economy is best encapsulated by Orson Welles in one of his most famous roles .

As Harry Lime in the Third Man, he famously said: “In Italy, for 30 years under the Borgias, they had warfare, terror, murder and bloodshed, but they produced Michelangelo, Leonardo da Vinci and the Renaissance.

“In Switzerland, they had brotherly love, they had 500 years of democracy and peace – and what did that produce? The cuckoo clock.”

Yet even if we ignore the fact that the cuckoo clock was never actually invented in Switzerland, this perception certainly does not reflect the reality of the Swiss economy today.

Fortunately, James Breiding’s book provides a long overdue revised view of the economic power of this small landlocked nation and it certainly should be summer reading for all of us who want to learn how to develop a successful economy.

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