Factors behind the Rise of the Swiss Economy

Western Europe has been an economic powerhouse. Superpowers like Germany and Great Britain have been a part of this region. However, the small landlocked country of Switzerland has turned out to be a more viable economic model when compared to these so-called superpowers. For many years, economists have been completely baffled by this stupendous growth that Switzerland has been able to achieve. In recent years, the interest in the Swiss model has become more visible. That is the reason why some research has been conducted in order to find out the factors which underlie the strength in the Swiss economy. Those factors have been listed in the article below.

Avoidance of War

The Swiss government and the Swiss people have been smart to avoid the scourge of war. War completely destroys an economy. Not only is there total annihilation during the war, but the process of rebuilding the nation also causes a lot of damage. The Swiss were smart to realize that war is bad for business. This is the reason why they have kept out of all wars. They do not have any strong political affiliations with any nation. The Swiss government is a friend to anybody that wants to do business with their county. This is the reason that Switzerland has marched straight on the path to growth whereas other European nations have faced destruction and have had to rebuild their economies over and over again.

It needs to be understood that Switzerland does not really ignore its defense. Serving in the military is compulsory for all their citizens. However, their military is only for defense purposes. They do not actively engage in wars as other European nations do.


Big socialistic governments are another major reason behind the mediocre performance of other European nations. Once again, the Swiss have been able to prevent the government from growing too big. Governments grow big when they are able to take a lot of money from people in the form of taxes. When the amount of money in the hands of the central government increases, chances of corruption also increase. Hence, the best way to prevent the embezzlement of cash from the hands of productive workers to the hands of corrupt politicians is to ensure that taxation is done locally.

Most of the taxes imposed in Switzerland are done locally. Only if the tax cannot be imposed at a local level does the federal government interfere. The benefit of such taxation is that local people can have more say in the manner in which their money is spent. Since the tax is being collected and spent locally, chances of corruption decrease. Also, regional politics cannot be played. Taxpayer money from all parts of the nation cannot be concentrated in a few provinces. The Swiss economy is an epitome of balanced development. It is not like many other nations of the world wherein one part of the nation is completely impoverished whereas the other is extremely wealthy.

Direct Democracy

All European nations are democratic. However, Switzerland follows a different kind of democracy called “direct democracy.” Since the population in Switzerland is education and understands the issues that face the country this system works fine.

Under this system, Swiss citizens above the age of 18 are required to vote on several issues. Notice that the votes are not cast to select a candidate. Instead, the votes are cast in order to make decisions on issues. This is the reason why Swiss voters have to vote several times a year. Often, people have to vote as many as four times a year on different issues relating to economic and foreign policy. To ensure that the productive time of the people is not wasted during this process, the option of postal voting is also provided.

Since Swiss voters take their government matters more seriously, they have been able to elect better governments than the rest of Europe.

Free Trade

Swiss people are diverse in nature. Some of the people settled in Switzerland belong to the French ethnicity. On the other hand, some people settled in Switzerland have German ethnicity. Regardless of their origins, Swiss people have been able to coexist peacefully. Also, some products of the Swiss industry are famous worldwide. For instance, there is a distinct market for Swiss watches and Swiss cheese worldwide. Customers recognize the high quality of these products and are willing to pay a premium for the same.

It is also important to realize that the Swiss government does not interfere much in the trade. There are no prohibitive tariffs which have been imposed on foreign products. Since Switzerland is a landlocked country, it does not have too many resources. It is dependent upon the import from other nations. However, since free trade has been managed so well, the Swiss people have not faced any major problems. Since Swiss people do not object to other products being sold in their country, their products are also welcome worldwide.

The essence of the article is that the Swiss economy has grown because they have focused more on their economy and less on their political affiliations. The Swiss system is not perfect. However, it can still serve as a role model that other countries can learn from and emulate.

❮❮   Previous Next   ❯❯

Authorship/Referencing - About the Author(s)

The article is Written and Reviewed by Management Study Guide Content Team. MSG Content Team comprises experienced Faculty Member, Professionals and Subject Matter Experts. We are a ISO 2001:2015 Certified Education Provider. To Know more, click on About Us. The use of this material is free for learning and education purpose. Please reference authorship of content used, including link(s) to ManagementStudyGuide.com and the content page url.