The Sweet Taste of Swiss Success

When I think of Switzerland, I think of rich chocolate and world-class watches, but these luxury exports are just the tip of the iceberg when it comes to their thriving economy. With a remarkable Gross Domestic Product growth from $9.5 billion to $800 billion in just 70 years, there must be a secret behind its success. Switzerland has been 1st globally in terms of its innovation and is one of the most competitive countries. What makes it even more impressive is that Switzerland has almost no natural resources, yet has achieved so much. If you have read my previous post on Sri Lanka, you may be able to recognize the differences between Sri Lanka and Switzerland that have contributed to their different current positions in the world as you read.

There are six main reasons that are talked about in regard to how Switzerland got so far.

Neutrality: Since Switzerland’s neutrality establishment in the Treaty of Paris in 1815, the country has not participated in any foreign wars. In fact, Switzerland has the oldest policy of neutrality worldwide; not only was it one of the few countries to not fight in World War II, but it also sold numerous weapons to allied powers amounting to a total of 900 million Swiss francs in wartime sales. In efforts to keep the country secure and peaceful, Switzerland ended up also protecting its economy from any major devastations as opposed to the surrounding European countries which lost many lives and big chunks of their economy. Instead of spending its resources on military and reconstruction efforts, Switzerland was free to further develop its economy.

Collective Political System: Similar to the USA’s congress, Switzerland has a parliament that makes decisions for the country as opposed to a president with total power. With a group of people with equal power to advise both the president and vice president, Switzerland has exhibited little internal conflict, and this collaborative political system has done wonders for the country in terms of economic growth.

High-Quality Production: Remember the rich chocolates and bougie watches I mentioned at the start? They aren’t just tasty and stylish, but they also play a big role in the status of the country. These quality products are so top-notch that people all over the world are willing to pay big bucks for them, meaning that Switzerland brings in high amounts of revenue from every corner. Do Nestle, Rolex, or Lindt ring a bell?

Safe Banking: If anyone is looking for a safe place to stash their cash, Swiss banks are definitely the place to go. These banks have a reputation for being the most secure places to keep money. No matter the financial state of the account holder’s home country, their money won't be jeopardized. Swiss banks have a very high secrecy system, making it illegal to share any account holder’s information with anyone. So depositors can rest easy knowing their funds are in good hands and their financial privacy is protected. Swiss banks are known not only for this secrecy but also for their country’s stability. With more money in the banks, they can lend out more loans, which leads to more economic activity and a more prosperous country. Plus, these banks are pretty strict about where the money comes from, so it is pretty uncommon to hear about any illegal activities in asset deposits.

Inheritance: Switzerland has this unique policy where every child gets an equal amount of their parent’s assets; not even a will can change that. This way, all members of the family are left with something to work with and it lowers the number of low-economic-status residents in the country. Rich people are able to maintain their wealth and poor people won’t be discriminated against from the right to an inheritance.

Industrialization: With no natural resources in stock, Switzerland resorted to industrialization and has definitely made quite a mark in that sector. Its exports are both potent and diverse: gold, blood, watches, chemicals, and medications. It also focuses a lot on creating domestic goods rather than buying cheap products elsewhere, making it an expensive country but ultimately leading to economic success.

As you can see, there are numerous policies that have gone into maintaining the richness of Switzerland, from peace treaties to government unity. So, the next time you take a bite out of some Swiss chocolate, remember that there is a lot more to this small country’s mighty success than meets the eye.

Resources

Why is Switzerland so rich?

How Switzerland Get So Rich

Switzerland GDP 1960-2023