Why is Switzerland’s economy strong?

Mudassir Ali
Apr 15, 2020 08:21 AM 0 Answers
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Why is Switzerland's economy strong?

Mudassir Ali
- Apr 15, 2020 08:21 AM

Originally Answered: why is Switzerland’s economy strong?
I think it has a lot to do with our good education system, a high interest in research, and a very good, reliable infrastructure. Our economy is not dependant on a few huge conglomerates, but rather on a host of small and mid-sized, very specialized companies that make equally specialized products virtually no one else is doing. Even if high, sometimes outlandish high prices are asked, they will get paid if you need or want the product. If then someone else copies the idea, they come up with something better.

Our education system is a so-called dual approach, meaning your regular school time ends at age 16, at grade 9. No senior high school and no awkward high school dating! Only those who plan to attend university (not college) will keep going to a prep course, they actually will get off High School and start that 4 1/2 year prep school at age 15. This is a very demanding course and it is designed in such a way that not everybody finishes. If you plan to become a doctor, you need a 7 year prep course and decide by age 12! Not many Swiss study to become a doctor. That is why you see many of them from Germany.

This way, only about 15 to 20 % of all Swiss will study at a regular university, becoming engineers, chemists, psychologists or architects. Almost everybody else will enter the apprenticeship program. That has nothing to do with Donald Trump and his reality show. It is a program that takes anywhere from 2 to 4 years to finish and consists in an on the job training of your field and 1 to 2 days of classes related to that field at school. Many professions that are thought to require a college or university degree in other countries are being taught this way in Switzerland. This has the advantage, that you hit the workforce by age 20, with already some experience in your field you actually got in the field itself, not from a book.

With such a diploma, you can then go on to technical university and get a degree similar to the one obtained at a regular university. These people make good money and are able to pay good taxes – which then will be used to improve on the infrastructure.

Which leads us to the next reason:

Switzerland has a very stable and rather efficient government, it is virtually unchanged since 1848, and has not suffered from war or excruciating economic downturns. This makes it a very attractive place for investments and many companies prefer to install their headquarters in Switzerland for this reason alone. Low taxes of course will help, too, which can be afforded due to a good overall tax base. Low military spending allows for a relatively low budget of the Federal government, which usually runs with a balanced budget. All this allows Switzerland to actually charge money from people who want to lend money to the country! Negative interest! Making for a very strong local currency, which in turn allows to get everything cheap from abroad.

Finally, if the OP thinks, that Swiss consumers do not spend much, well, you then have not been in Zurich lately, or at any store for that matter. Sure they always complain, but never fail to make quite handsome earnings. We spend so much here, that some 20% of people actually shop across the border in Germany – and stores are still quite busy. Lots get spent on vacations, cars, and specially healthcare. This keeps the pharmaceuticals busy – and all these doctors, therapists and what have you. Consumer spending actually is another backbone of the economy, as is construction and specially housing. There might be a housing bubble brewing here, since people here never pay off the debt, only interest. This way, lots of people have gotten into homes who only can afford it due to low interest rates (remember the negative interest?) If they go up, many might go bellyup and then prices will come down. A housing crisis once brought a pretty nasty downturn to Switzerland in the Nineties.

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