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Switzerland’s Economic and Socioeconomic Forces

Switzerland stands down in history as one of the world’s economies with high levels of political and economic tolerance, owing to its multicultural and multilingual communities that have strived to coexist peacefully. The Swiss Confederation is a landlocked state with a population of around 8 million people and a physical area of 41,290 square kilometers. Switzerland’s economic thrive is attributed to the fact that it neighbors some of the most developed economies in the world like France, Germany, Italy Liechtenstein and Austria (appendix 1). According to Vallet (2016), Switzerland enjoys a diverse linguistic geography with Italian, German, Romansch and French being the four widely spoken languages. The current paper seeks to undertake an analysis of Switzerland based on its economic and socioeconomic forces, competitor and distributive forces and human relations from the perspectives of international business.

Economic and Socioeconomic Forces

Bogdan (2017) describes Switzerland as a modern market economy enjoying a peaceful environment of business. With its average annual GDP ranging between 450 and 500 billion U.S. dollars, Switzerland’s per capita GDP is considered to be among the highest in the world (Haupt, Vadenbo & Hellweg, 2017). According to Segessemann and Crevosier (2016), the Swiss government stirs its economic growth through establishment and adherence to trade relations with key members of the European Union through initiating a tandem of bilateral trade agreements in which Switzerland is allowed to access E.U’s single market with the acceptance of adherence to some aspects of its legislations. The E.U is considered as one of Switzerland’s major trade partners. As a matter of fact, Schwock and Najy (2016) explain that Switzerland is ranked third among the most important trade partners of the E.U.

According to Bogdan (2017), Switzerland’s total exports supersede its imports by a great margin. This is attributed to the fact that the Swiss government encourages its industries to process its imported commodities for resale to its major trade partners at higher prices. According to Vallet (2017) most of Switzerland’s exports to the European Union are concentrated in the chemical and medicinal industries, instruments and machinery. With about 100 bilateral agreements existing between the European Union and the Swiss government the country’s economic development has been favored by the allowance of free movement of people, elimination of trade barriers, reformed public procurement processes and well established scientific research agreements.

Switzerland’s inflation rates have remained low with a constancy of between 0.5% and 2% (Haupt, Vadenbo & Hellway, 2017). According to Segessemann and Crevoisier (2016), such low levels of inflation in Switzerland contribute to its negative interest rates. The economy is aware of the fact that it would be faced by the dangers of piling financial imbalances. As a result, it has endeavored to start doing away with extraordinary policy stimulus as a way of catching up with the rising interest rates in major economies of the world. Switzerland’s budget continues to reveal some levels of surplus. This gives the implication that the country experiences a continued reduction in its levels of public debt in comparison to GDP. According to Schwok and Najy (2016), Switzerland experiences an ample fiscal space and proper utilization of such platforms could aid in relieving its monetary policy with immense pressures as well as the levels of economic growth.

Vallet (2017) explains that Switzerland is one of the world’s steadiest and most proactive employment economies in the world. According to Haupt, Vadenbo and Hellwey (2017), the Swiss government offers its employees with high quality benefits. Switzerland goes to record as one of the countries in Europe with the least rates of unemployment. Bogdan (2017) explains that the country’s rate of unemployment stood at 3.3% in 2016. According to Segessemann and Crevoiser (2016), Switzerland still encourages is initial traditions of developing a high quality workforce for its European Union counterparts. Schwock and Najy (2016) explain that the Swiss government trains and equips its citizenry with high quality professional skills to meet the international labor market requirements at higher price ratings. On the other hand, it takes advantage of its bilateral agreements to source out for cheap sources of labor from its neighbors. As a result, its citizens end up earning higher salaries in comparison to its neighbors.

Competitive and Distributive Forces

Switzerland is considered to possess one of the most competitive places in global markets based on its high skilled employees and well set economic environments. For instance, the Swiss education system is considered to be one of the best on international scales because of its emphasis on paying attention to the role of human resources in driving economic developments. According to Vallet (2017), one’s education attainment is of great significance in determining their employment projections and is a great contributor of competitiveness in international labor force markets. The Swiss education system aims at producing a larger fraction of skilled workmen in comparison to its numerical figure of the less skilled laborers. With its literacy rate standing at 99%, almost every member of the Swiss population is literate. As a matter of fact, Haupt, Vadenbo and Hellway (2017) note that academic procedures in this economy reveals great variations between individual cantons.

Infrastructural and telecommunications developments play significant roles in determining how competitive a country is in allowing for direct foreign investment. According to Bogdan (2017), the Swiss transport infrastructure is among the finest in the world. The country is connected with a dense network of tramway lines and railroads which are well organized based on methodical timetables. As a matter of fact, most of the highways and motorways have direct connections to other key players in the EU region like Germany, Italy, France and Austria. According to Segessemenn and Crevoisier (2016), international airports located in key business areas like Lugano, Zurich, Basel and Geneva play a significant role in connecting the country to the rest of the world and major Swiss towns. On the other hand, Switzerland encourages the development and implementation of information and communication technologies which are sustainable and highly innovative. The government partners with other players in the private sector to diffuse ICTs for content and infrastructural applications. As a matter of fact, Schwok and Najy (2016) explain that Switzerland’s expenditure per capita on ICT is among the highest on a global scale and far above the average for Western European average. According to Vallet (2016), Switzerland’s largest economic share is occupied by IT dependent industries.

Switzerland boasts of the high quality of life enjoyed by its populace which is as a result of stabilized political environment, strengthened economic factors and highly sustainable social systems (Haupt, Vadenbo & Hellway, 2017). Switzerland goes to record as a country with very low levels of crime all over the world despite enjoying a high GDP per capita. According to Segessemann and Crevoisier (2016), the presence of a wider range of leisure and sporting opportunities accounts for its high numbers of tourist visits. Further, the country offers its investors with competitive tax packages which make it favorable for both new entrants and multinational corporations to establish their operations. Further, the existence of bilateral treaties and trade agreements has made Switzerland one of the most preferred destinations for foreign investors. On the other hand, Bogdan (2017) explains that both the central government and cantons offer assistance to foreign entities dealing in technological innovations through subsidies and incentives.

Human Relations

Switzerland is multilingual with more than 20% of its inhabitants being of foreign origin. As a matter of fact, the Swiss government continues to promote cohesion among its citizens and foreigners with little regard of their racial, political, gender and religious affiliations. According to Schwok and Najy (2016), Switzerland encourages its sate institutions to implement policies geared towards strengthening the human rights of the population in totality through shunning away from all sorts of injustice and sidelining. Vallet (2016) explains that the government enhances all initiatives whose aim is to ensure equal access to resources offered by both the local and national authorities through clear legal frameworks. One of the greatest evidences of positive human relations in Switzerland is its booming tourist industry. According to Bogdan (2017), most of the visitors prefer this destination because of the hospitable nature of its inhabitants.

Conclusion

Despite its small geographical area, Switzerland reveals high levels of economic activities. There is no doubt that the strategies adopted by the Swiss government have yielded fruits in ensuring that the country maintains a strong economic position both in the E.U. region and on a global scale. Switzerland continues to increase its investments in the best infrastructure, IT innovations and education system to maintain its economic position. Positive human relations in Switzerland account for increased foreign investments and tourism activities which are the greatest contributors of national revenues.

References

Bogdan, Z. P. (2017). The Place of Switzerland in Romania’s Foreign Trade with EFTA During 2007-2016. Annals-Economy Series, 3, 138-145.

Haupt, M., Vadenbo, C., & Hellweg, S. (2017). Do We Have the Right Performance Indicators for the Circular Economy?: Insight into the Swiss Waste Management System. Journal of Industrial Ecology, 21(3), 615-627.

Schwok, R., & Najy, C. (2016). 8 Switzerland’s bilateral approach to European integration. The European Neighbourhood Policy in a Comparative Perspective: Models, Challenges, Lessons, 125.

Segessemann, A., & Crevoisier, O. (2016). Beyond Economic Base Theory: The Role of the Residential Economy in Attracting Income to Swiss Regions. Regional Studies, 50(8), 1388-1403.

Vallet, G. (2016). The role of the swiss franc in Switzerland’s European stance. Research in International Business and Finance, 38, 35-44.

Appendices

Appendix 1: The map of Switzerland.