GLOBAL COMPETITIVE INDEX REPORT

ANALYSIS: SWITZERLAND

Report presented by: Group A

Ahmad Rameez- 17pgpm02

Bikas Choudhary-17pgpm10

Gourav kumar Sunda-17pgpm11

Sajal Kumar-17pgpm24
Brief overview of the history and economy of Switzerland
Switzerland, officially the Swiss Confederation, is a federal
republic in Europe. It consists of 26 cantons, and the city of Bern is the
seat of the federal authorities. [The country is situated in Western-
Central Europe, and is bordered by Italy to the south, France to the
west, Germany to the north, and Austria and Liechtenstein to the
east. Switzerland is a landlocked country geographically divided
between the Alps, the Swiss Plateau and the Jura, spanning an area of
41,285 km2 (15,940 sq mi). While the Alps occupy the greater part of
the territory, the Swiss population of approximately eight million
people is concentrated mostly on the plateau, where the largest cities
are to be found: among them are the two global cities and economic
centers Zürich and Geneva.
Switzerland is one of the most developed countries in the world, with
the highest nominal wealth per adult and the eighth-highest per
capita gross domestic product according to the IMF. Switzerland ranks
at or near the top globally in several metrics of national performance,
including government transparency, civil liberties, quality of
life, economic competitiveness, and human development. Zürich and
Geneva have each been ranked among the top cities in the world in
terms of quality of life, with the former ranked second globally,
according to Mercer.
In 2013 the mean household income in Switzerland was CHF 120,624
(c. USD 134,000 nominal, USD 101,000 PPP), the mean household
income after social security, taxes and mandatory health insurance was
CHF 85,560 (c. USD 95,000 nominal, USD 72,000 PPP). The OECD
lists Swiss household gross adjusted disposable income per capita USD
32,594 PPP for 2011.
As of 2016, Switzerland had the highest average wealth per adult,
at $561,900.
This development was tied to the exchange rate between the US Dollar
and the Swiss franc, which caused capital in Swiss francs to more than
double its value in dollar terms during the 2000s and especially in the
wake of the financial crisis of 2007–2008, without any direct increase
in value in terms of domestic purchasing power.
Switzerland has the comparatively high Gini coefficient of 0.8, similar
to the US and Denmark, indicating unequal distribution. The high
average wealth is explained by a comparatively high number of
individuals who are extremely wealthy; the median (50th percentile)
wealth of a Swiss adult is five times lower than the average, at USD
100,900 (USD 70,000 PPP as of 2011)
In the early 2000s recession, being so closely linked to the economies
of Western Europe and the United States, Switzerland was not able to
escape the slowdown felt in these countries. After the worldwide stock
market crashes in the wake of the 9/11 terrorism attacks there were
more announcements of false enterprise statistics and exaggerated
managers' wages. In 2001 the rate of growth dropped to 1.2%, to 0.4%
in 2002 and in 2003 the real GDP contracted by 0.2%. That economic
slowdown had a noticeable impact on the labor market.
Many companies announced mass dismissals and thus the
unemployment rate rose from its low of 1.9% in June 2000 to its peak
of 3.9% in October 2004, although well below the European
Union(EU) unemployment average of 8.9%. The consumer mood
worsened and domestic consumption decreased.
The exports of goods and services in the EU and the USA decreased as
a result of the Swiss Franc's appreciation in value which caused an
increase in prices of exported goods and services. On the other hand,
Switzerland's tourism sector slumped and room occupation rates by
foreign guests decreased. Besides that a deficit of market competition
in many branches of Switzerland's economy persisted.
On the 10.11.2002 the economics magazine Cash published 5 measures
which political and economic factors were suggested to implement so
that Switzerland would once again experience an economic revival:
1. Private consumption should be promoted with decent wage
increases. In addition to that families with children should get discounts
on their health insurances.
2. Switzerland's national bank should revive investments by lowering
interest rates. Besides that monetary institutes should increasingly
credit consumers and offer cheaper land zones which are to be built on.
3. Switzerland's national bank is asked to devalue the Swiss Franc,
especially compared to the Euro.
4. The government should implement the anti-cyclical measure of
increasing budget deficits. Government spending should increase in the
infrastructural and educational sectors. Lowering taxes would make
sense in order to promote private household consumption.
5. Flexible work schedules should be instituted, thus avoiding low
demand dismissals.
These measures were applied with successful results along with the
government's policy of the Magical Hexagon which consists of full
employment, social equality, economic growth, environmental quality,
positive trade balance and price stability. The rebound which started in
mid-2003 saw growth rate growth rate averaging 3% (2004 and 2005
saw a GDP growth of 2.5% and 2.6% respectively; for 2006 and 2007,
the rate was 3.6%). In 2008, GDP growth was modest in the first half of
the year while declining in the last two quarters. Because of the base
effect, real growth came to 1.9%. While it contracted 1.9% in 2009, the
economy started to pick up in Q3 and by the second quarter of 2010, it
had surpassed its previous peak. Growth for 2010 stood at 2.6%
The stock market collapse has deeply affected investment income
earned abroad. This has translated to a substantial fall in the surplus of
the current account balance. In 2006, Switzerland recorded a 15.1% per
GDP surplus. It went down to 9.1% in 2007 and further dropped to
1.8% in 2008. It recovered in 2009 and 2010 with a surplus of 11.9%
and 14.6% respectively. As of the first quarter 2010, Switzerland house
prices are still edging up.
This is a chart of trend of gross domestic product of Switzerland at market prices estimated

Gross Domestic Product(billions of Swiss

Year US Dollar Exchange
Francs)

1980 184 1.67 Francs

1985 244 2.43 Francs

1990 331 1.38 Francs

1995 374 1.18 Francs

2000 422 1.68 Francs

2005 464 1.24 Francs

2006 491 1.25 Francs

2007 521 1.20 Francs

2008 547 1.08 Francs

2009 535 1.09 Francs

2010 546 1.04 Francs

2011 659 0.89 Francs

2012 632 0.94 Francs

2013 635 0.93 Francs

2014 644 0.92 Francs

2015 646 0.96 Francs

2016 659.8 0.98 Francs

Data Collection and Research Methodology

Administrative data (publicly available data), such as enrollment

Rates, government debt, budget deficit, and life expectancy, which
are obtained from internationally recognized agencies, notably the
United Nations Educational, Scientific and Cultural
Organization (UNESCO), the IMF, and the World Health
Organization (WHO). Furthermore, it uses data from the World
Economic Forum’s annual Executive Opinion Survey (Survey).
Period of Study-
We are collecting the GCI data of Switzerland for last 10 years i.e.
from
2008 to 2017.

Method Used- GCI (global competitiveness index)

The Global Competitiveness Index is published annually by the World
Economic Forum, an independent international organization committed
to improving the state of the world by engaging leaders in partnerships
to shape global, regional and industry agendas.
Structure and Limitations
The GCI is built upon twelve pillars organized into three sub-indices.
The pillars are composed of ninety variables that influence a country's
competitiveness. The three sub-indices are:
  Basic Requirements - This sub-index measures the degree to
which the environment enables factors of production (e.g. raw
materials, physical and human capital) to participate in the
economic marketplace.

The pillars within this sub-index are: macroeconomic stability, the

efficiency of private and public institutions, infrastructure, health
and primary education. The GCI recognizes these categories as
the key contributors to development for countries with GDP per
capita less than $2,000, calculated at PPP.
 Efficiency Enhancers - This sub-index measures the factors
contributing to the degree of productivity in the economy.

The pillars within this sub-index are: higher education and

training, market efficiency (in terms of products, labor, and
financial), market size, and technological readiness (an economy's
ability to adapt existing technologies). The GCI recognizes these
categories as the key contributors to development for countries
with GDP per capita between $3,000 and $9,000.
 Innovation and Sophistication - This sub-index measures the
factors that contribute to the development and manufacturing of
new products.

The pillars within this sub-index are: business sophistication and

R&D innovation. The GCI recognizes these categories as the key
contributors to growth for countries with GDP per capita over
$17,000.
The GCI ranks countries according to their overall performance and
also provides scores by sub-index, pillars, and variables.
Data Sources
The variables used in determining the GCI are drawn from two sources:
statistical data collected from a variety of sources such as the IMF and
the World Bank and managerial surveys.
Usage
The Global Competitiveness Index provides a comparative overview of
the economic and business potential of countries. For each individual
country, the GCI enables decision makers to estimate the productivity
of individual sectors and the economy as a whole. Furthermore, the
index identifies elements of the economy that stimulate or inhibit
growth.

GCI REPORT OF SWITZERLAND

Switzerland is top of the class in the World Economic Forum (WEF)’s
Global Competitiveness Index – for the ninth year in a row – narrowly
ahead of the United States and Singapore.
It gained its highest ever score in the past ten years of the WEF ranking
external link, thanks to its ability to innovate, its sophisticated
businesses, and a highly effective labor market.
Economic performance benefits from extremely strong fundamentals
including public health, primary education, and a comparatively solid
macroeconomic environment. Its economy has a high level of
flexibility, with its labor markets being ranked as the best-functioning
globally

Radar Diagram

GCI
7
12th pillar:Innovation 1st pillar:Institution
6
5
11th pillar:Business 2nd
sophistication 4 pillar:Infrastructure
3
2 3rd pillar:Macro 2008-09
10th pillar:Market size 1 economic 2011-12
0 environment
2014-15
9th 2017-18
4th pillar:Health &
pillar:Technological
primery education
readiness

8th pillar:Financial 5th pillar:Higher

market development education & training
7th pillar:Labour 6th pillar:Goods &
market efficiency market efficiency
 1ST PILLAR: INSTITUTION

1st pillar:Institution
6.1
6
5.9
5.8
5.7
1st pillar:Institution
5.6
5.5
5.4

The institutional environment is determined by the legal and

administrative framework within which individuals, firms, and
governments interact to generate wealth.
The quality of institutions has a strong bearing on competitiveness and
growth. It influences investment decisions and the organization of
production and plays a key role in the ways in which societies distribute
the benefits and bear the costs of development strategies and policies.
Overall the country is performing well in terms of institutional
competitiveness, apart from a minor dip in the year 2013-14, it has
picked up pace after that. The major reason being its environment
favoring the entrepreneurship.
Switzerland is among top 10 nations providing favorable environment
for startups, according to the report published by Global
Entrepreneurship Development Institute (GEDI) for the year 2016.

Particular strengths of Switzerland noted were:

 There was a high percentage of start-ups with innovative products.

 High percentage of start-ups with products focused on niche
markets with a relatively less competitive environment.
 Early internationalization.
 Availability of a highly qualified work force.
 Availability of formal and informal venture capital.
 Risk acceptance by the founders, because the risk factor was very
low.

2ND PILLAR: INFRASTRUCTURE

2nd pillar:Infrastructure
6.6
6.4
6.2
6
5.8 2nd
5.6 pillar:Infrastructure

5.4
5.2
Extensive and efficient infrastructure is critical for ensuring the effective
functioning of the economy, as it is an important factor in determining
the location of economic activity and the kinds of activities or sectors
that can develop within a country. Well-developed infrastructure reduces
the effect of distance between regions, integrating the national market
and connecting it at low cost to markets in other countries and regions.
In addition, the quality and extensiveness of infrastructure networks
significantly impact economic growth and reduce income inequalities
and poverty in a variety of ways. A well-developed transport and
communications infrastructure network is a prerequisite for the access of
less-developed communities to core economic activities and services.
Competitiveness in terms of infrastructure is showing a stable trend over
the years with a slight jump in the year 2017-18.
Transport systems
Switzerland is well-known for its high quality transport system with a
large network of railroads, bus and tramway lines as well as motorways
covering the mountainous country. The neighboring countries Germany,
France, Austria, Italy and Liechtenstein can easily be reached by train,
car or bus. Switzerland continues to invest a large amount of money into
transportation infrastructure, such as road construction.
Telecommunications / IT
Switzerland has one of the highest spending per capita on ICT
(Information and Communication Technology) in the world
Energy
Switzerland has a reliable and secure energy supply system. Switzerland
maintains almost CO2-free energy production. The most important
power suppliers in Switzerland are hydropower plants. Switzerland’s
integration into the interconnected European energy system ensures that
the entire country is supplied with electricity, even during periods of
particularly high power consumption.
Switzerland is currently discussing a new infrastructure which would
mitigate the bottlenecks of freight transportation, which is blocked on
the way because of traffic, while contributing to congestion as well.
Logistics are a very important feature of an economy, comparable to the
blood running through the veins: it makes a big difference whether it
functions well or not. This new project will be designed to make sure
that the arrival time of goods in Switzerland returns to predictability.
Their project is looked after by GIB (Global Infrastructure Basel). The
GIB Foundation is a nonprofit foundation located in Switzerland. Its
goal is to promote sustainable and resilient infrastructure with a focus on
developing countries.
 3RD PILLAR: MACRO ECONOMIC ENVIRONMENT

3rd pillar:Macro economic environment

6.8

6.6

6.4

6.2

6 3rd pillar:Macro
economic environment
5.8

5.6

5.4

The stability of the macroeconomic environment is important for

business and, therefore, is significant for the overall competitiveness of a
country.
the economy cannot grow in a sustainable manner unless the macro
environment is stable. Macroeconomic stability captured the attention of
the public most recently when some advanced economies, notably the
United States and some European countries, needed to take urgent action
to prevent macroeconomic instability when their public debt reached
unsustainable levels in the wake of the global financial crisis.
It is important to note that this pillar evaluates the stability of the
macroeconomic environment, so it does not directly take into account
the way in which public accounts are managed by the government. This
qualitative dimension is captured in the institutions pillar described
above.
Switzerland remains a prosperous country with a large budget surplus.
Swiss currency has become a safe haven for investors and has
subsequently made exports more expensive. The decision of the Swiss
National Bank in January 2015 to abandon the currency peg to euro has
radically increasing the value of the Franc. Exports, in particular
pharmaceutical and watch making products remain an economic
backbone, due to the fact that Swiss exports are well known for their
quality. The abandoning of the fixed exchange rate reduced companies
margins in 2016, whilst immigration fell. This had a particular impact on
the economy as 30.5% of the workforce is composed of immigrants. The
fall in immigration has to be compensated by a partial automation of
production, allowed by weak interest rates and a fall in import costs.
Nevertheless, the economy was sluggish in year 2016 due to the strong
Swiss Franc. In 2016, the Swiss Central Bank issued negative rate
bonds, in order to counter the imported deflation and the sluggish
growth rate. The government adopted measures to preserve the country's
attractiveness as a financial centre; Switzerland signed an agreement on
the automatic exchange of information with the European Union. The
government reformed the health care and agriculture sectors, and
modernized public services. The Swiss unemployment rate, at 4.9%, is
still very low in comparison with the European Union average, although
it has shown drastic rise in recent years. The country is ranked eighth
worldwide for GDP per capita. The economy benefits most from strong
household consumption, external trade and public spending.

Agriculture comprises less than 1% of GDP and employs 3.2% of the

active population. Despite the small size of the overall agricultural
industry, organic farming has experienced considerable growth.
Industry employs 20% of the workforce and comprises 25% of GDP. The
strong industry sector is driven by large exporting groups. Basel, in
particular, is home to a very dynamic and powerful chemical and
pharmaceutical industry. Electricity is generated chiefly from hydraulic
and nuclear power. Hydroelectric resources provide almost two-thirds
of the country's energy. The service sector comprises nearly 74% of
GDP and employs slightly less than three-quarters of the workforce.
The banking sector alone represents 8% of the GDP. Tourism, which
adds significantly to the economy, helps to balance Switzerland's trade
deficit.

4TH PILLAR: HEALTH & PRIMERY EDUCATION

4th pillar:Health & primery education

6.9
6.8
6.7
6.6
6.5
6.4
6.3 4th pillar:Health &
6.2 primery education
6.1
6
5.9
A healthy workforce is vital to a country’s competitiveness and
productivity. Workers who are ill cannot function to their potential and
will be less productive. Poor health leads to significant costs to business,
as sick workers are often absent or operate at lower levels of efficiency.
Investment in the provision of health services is thus critical for clear
economic, as well as moral, considerations.
In addition to health, this pillar takes into account the quantity and
quality of the basic education received by the population, which is
increasingly important in today’s economy.
Switzerland is home to one of the world's most thriving economies and
also one of the happiest populations on the globe. According to the
World Economic Forum's 2013 Human Capital Report, Switzerland
invests more in the health, education and talent of its people than any
other country in the world. Saadia Zahidi, Senior Director of the World
Economic Forum, tells The Huffington Post. "The biggest resource it
does have is people, and that's what it's been investing in for quite some
time. It's led to an economy that is competitive, highly innovative, and
has adopted technology fast."
99.5% of Swiss citizens have health insurance. Because they can choose
between plans from nearly 100 different private insurance companies,
insurers must compete on price and service, helping to curb health care
inflation. Most beneficiaries have complete freedom to choose their
doctor, and appointment waiting times are very low. The government
subsidizes health care for the poor on a graduated basis, with the goal of
preventing individuals from spending more than 10 percent of their
income on insurance.
Health spending = $7919 per capita
Hospital beds = 4.6 per 1000 inhabitants
Length of hospital stay = 5.7 days
Life expectancy at birth 80.3 years
Source: www.oecd.org

The Swiss have the lowest government spending on health care in the
developed world and some of the healthiest citizens.
Compulsory Swiss education
Education is compulsory for all children and young people in
Switzerland even those who do not have a legal residency status.
Switzerland Education System Scenario
According to Federal Statistics Office new scenarios for the education
system, the proportion of tertiary education graduates (higher education
institutions and higher vocational education) in the population aged 25
to 64 is set to rise from 37% in 2012 to 45% in 2022. The number of
graduates of Swiss higher education institutions in the population should
increase by 370,000.
The employment rate in Switzerland for people with all levels of
education is 83%, placing it first together with Iceland, Norway and
Sweden among OECD countries.
In Switzerland, education is government responsibility from the
beginning of compulsory education up to and including tertiary level.
The Swiss education system is characterized in particular by
 A high degree of permeability: There are many ways to enter or
transfer to a training programme or school or to attend a catch-up
training programme.
 Open access to the various types of education: Anyone who has the
necessary qualifications can generally attend the course of his/her
choice, and the university attended can also be freely selected.
Vocational education and training is subject to some restrictions
due to ceilings on apprenticeship positions. At some universities,
access to specific subjects is also limited.
 5TH PILLAR: HIGHER EDUCATION & TRAINING

5th pillar:Higher education & training

6.2
6.1
6
5.9
5.8
5.7 5th pillar:Higher
5.6 education & training
5.5
5.4
5.3

Quality higher education and training is crucial for economies that want
to move up the value chain beyond simple production processes and
products
J Today’s globalizing economy requires countries to nurture pools of
well-educated workers who are able to perform complex tasks and adapt
rapidly to their changing environment and the evolving needs of the
production system. This pillar measures secondary and tertiary
enrollment rates as well as the quality of education as evaluated by
business leaders. The extent of staff training is also taken into
consideration because of the importance of vocational and continuous
on-the-job training—which is neglected in many economies—for
ensuring a constant upgrading of workers’ skills.
In terms of higher education and training, Switzerland is continuously
improving its profile. We can see a positive trend with steep rises over
the years from the graph above.
One of the major reasons being the support from the government in
providing necessary education free of cost and later for higher education,
providing diverse opportunities. There are three types of upper
secondary education include:
 Vocational education and training (VET) schools
 Baccalaureate schools
 Upper secondary specialized schools
Vocational education and training (VET) schools
Most students in Switzerland go onto vocational education and training
(VET) programmes after lower secondary education. Basic vocational
education lasts between two and four years and provides practical and
technical training. Education takes place in vocational schools,
companies that provides apprenticeships, and cross-company courses

Baccalaureate schools

About a third of Swiss students go onto baccalaureate school, which

provides a general education in preparation for admission to university.
Pupils usually enroll at baccalaureate schools in the last year of lower
secondary education. Baccalaureate programmes usually last for four
years but three years in some cantons and six years in other.

Upper secondary specialized schools

Around 5 percent of students go onto upper secondary specialized

schools. They provide a school-based general education and preparation
for professional education and training (PET) in specific occupations –
like healthcare, social work and education – at PET colleges and
universities of applied sciences. There are upper secondary specialized
schools in 22 cantons, both canton and privately run.
Special needs schools in Switzerland

Children and young people with special educational needs in

Switzerland have a right to schooling and support from specialists from
birth up to their 20th birthday. Children are assessed by specialist
agencies within the canton and may attend a mainstream school with
support, or a special needs school.

6TH PILLAR: GOODS & MARKET EFFICIENCY

6th pillar:Goods & market efficiency

6.2
6
5.8
5.6
5.4
6th pillar:Goods &
5.2
market efficiency
5
4.8
4.6

Countries with efficient goods markets are well positioned to produce the right mix
of products and services given their particular supply-and-demand conditions, as
well as to ensure that these goods can be most effectively traded in the economy.
Healthy market competition, both domestic and foreign, is important in driving
market efficiency, and thus business productivity, by ensuring that the most
efficient firms, producing goods demanded by the market, are those that thrive.
The best possible environment for the exchange of goods requires a minimum of
government intervention that impedes business activity.

Market efficiency also depends on demand conditions such as customer orientation

and buyer sophistication. For cultural or historical reasons, customers may be more
demanding in some countries than in others. This can create an important
competitive advantage, as it forces companies to be more innovative and customer-
oriented and thus imposes the discipline necessary for efficiency to be achieved in
the market.

Switzerland has done constantly well in the Goods and Market efficiency in the
recent years making it highly productive and economically irrepressible. Despite
of the emerging market crisis and Euro’s difficulties, Switzerland has maintained
an impressive growth record and an efficient goods and market efficiency. The
credit for such efficiency goes to the dynamic nature of Switzerland’s market and
its strong urge for innovation. The transparent political system lends itself well to
formulating and implementing long-term economic agendas.

Switzerland has a highly sophisticated business environment which is supported

by well-functioning labor and financial markets, which help Swiss companies offer
high-quality products and compete across a very sophisticated product range.

Switzerland further boasts a top-notch labor market that is flexible and efficient in
deploying its talent and is growing at a fast pace due to rise in immigration of
skilled labor and bilateral agreement on free circulation with the European Union.

7TH PILLAR: LABOUR MARKET EFFICIENCY

7th pillar:Labour market efficiency

6.05
6
5.95
5.9
5.85
5.8
5.75 7th pillar:Labour
5.7 market efficiency
5.65
5.6
5.55
The efficiency and flexibility of the labor market are critical for ensuring
that workers are allocated to their most effective use in the economy and
provided with incentives to give their best effort in their jobs.
Efficient labor markets must also ensure clear strong incentives for
employees and efforts to promote meritocracy at the workplace, and they
must provide equity in the business environment between women and
men. Taken together these factors have a positive effect on worker
performance and the attractiveness of the country for talent, two aspects
that are growing more important as talent shortages loom on the horizon.
The Swiss labor market has proven resilient to several large shocks
during 2000−2016, for example, the Great Recession in 2008, a massive
inflow of foreign workers, and a sharp appreciation of its currency.
Despite these challenges, unemployment remained stable, and real
wages have been on a steadily increasing path. However, differences in
labor market performance across regions and between genders continue
to arouse concern. Switzerland should maintain the policies that have
supported this resilience, such as its flexible labor laws, and should resist
new policy proposals that may endanger it, such as a high general
minimum wage. Policymakers should maintain the active strategy to
help job seekers find jobs, and develop new tools to reverse the upward
trend in long-term unemployment, perhaps by giving job seekers access
to information that would help in job search.
In comparison with other countries, Switzerland’s labor market is
particularly flexible thanks to its liberal legislation. Companies face few
constraints regarding their hiring or dismissal procedures, wage setting
and working schedules. This approach is appreciated by many
companies as it enables a direct dialogue between employer and
employees.
The labor force in Switzerland has increased by 25% from 2000 to 2016.
Today, foreigners account for 26% of the labor force in Switzerland.
The long-term unemployment rate, the share of the unemployed who
have been searching for a job for one year or more among all the
unemployed, is an important indicator of labor market performance. This
rate can be high in countries with low unemployment due to low inflow
into unemployment. For Switzerland, the long-term unemployment rate
was stable at around 30% throughout the 1990s before rising by 10%
between 2001 and 2005. Despite Swiss labor market reforms in 2003 [1]
and 2011 [2], which incentivized early return to work by reducing
possible benefit duration for certain groups, the long-term
unemployment rate never recovered, and exceeded the OECD mean of
34% in 2016.
After increasing slightly throughout the period 2000-2016, labor force
participation for those aged 15 or older was among the highest of all
OECD countries, reaching 69% in Switzerland in 2016.
When looking at unemployment by gender and age, men are somewhat
less likely to be unemployed than women. However, gender differences
in unemployment have dropped considerably in Switzerland during the
past 15 years. While women were about one percentage point more
likely to be unemployed than men between 2003 and 2008, the
difference narrowed to about 0.5 percentage points during the period
2013 to 2016.
Gender gap: Men are much more likely to be in the labor force than
women. In 2000, 57% of all women were in the labor force, compared to
77% of all men, a gap of 20 percentage points. In 2016, this gap had
narrowed to 11 percentage points, both because men left the labor force,
and women entered it.
 8TH PILLAR: FINANCIAL MARKETIN DEVELOPMENT

8th pillar:Financial market

development
5.35
5.3
5.25
5.2
5.15 8th pillar:Financial
5.1 market development
5.05
5

The financial and economic crisis has highlighted the central role of a sound and
well-functioning financial sector for economic activities. An efficient financial
sector allocates the resources saved by a nation’s citizens, as well as those entering
the economy from abroad, to their most productive uses.

A thorough and proper assessment of risk is therefore a key ingredient of a sound

financial market.

Business investment is also critical to productivity. Therefore economies require

sophisticated financial markets that can make capital available for private-sector
investment from such sources as loans from a sound banking sector, well-regulated
securities exchanges, venture capital, and other financial products. In order to
fulfill all those functions, the banking sector needs to be trustworthy and
transparent, and—as has been made so clear recently—financial markets need
appropriate regulation to protect investors and other actors in the economy at large.

One reason for the strength of the franc is the fact that Switzerland has the
world’s lowest rate of inflation. Switzerland’s combination of price stability and
currency stability creates the best conditions for a successful financial market.
Even the volatility of Swiss shares is in the lowest quarter of a global comparison.
Although Switzerland has just 0.1% of the world’s population (and 1% of global
GDP), the Swiss stock market’s share of global stock market capitalization is 3%.
Eloquent testimony to a successful model.

We can see a dip in the year 2009-10; this was mainly due to the economic crisis in
the year 2008, leading to worldwide recession.

For the year 2015-16, the dip was due to Dubai stock exchange crash in year 2014
which led to oil crisis, followed by stock market crisis in China and later USA in
the year 2015.

9TH PILLAR: TECHNOLOGICAL READINESS

9th pillar:Technological readiness

6.6
6.4
6.2
6
5.8 9th
pillar:Technological
5.6 readiness
5.4
5.2

In today’s globalized world, technology is increasingly essential for

firms to compete and prosper. The technological readiness pillar
measures the agility with which an economy adopts existing
technologies to enhance the productivity of its industries, with specific
emphasis on its capacity to fully leverage information and
communication technologies (ICTs) in daily activities and production
processes for increased efficiency and enabling innovation for
competitiveness. Switzerland stands first in terms of technological
readiness among all the nations under survey. Switzerland is top in the
world when it comes to innovation, according to an index by the World
Intellectual Property Organization (WIPO). It’s the sixth year in a
row that the Alpine nation’s come out on top.
1. A nation of inventors
Looking at the number of patent applications – the Swiss have the
highest ratio of European patent applications to population.

In 2015, Switzerland had 873 applications per million inhabitants,

followed by the Netherlands with 419 per million and Sweden with 392
per million.
2. World-class research institutes
Universities in Switzerland regularly score high in various rankings: in
2016 the Swiss federal technology institute ETH Zurich came fourth in
Europe behind three British universities: Oxford, Cambridge and
Imperial College London (and 19th overall) in the Times Higher
Education World Reputation Rankings.
The universities are involved in projects like, an innovation park in the
Swiss city of Fribourg which aims to create 200 jobs, and provide a
space where scientists and entrepreneurs can meet.
3. High profile green innovation projects
The Swiss solar-powered plane Solar Impulse has drawn worldwide and
long-lasting attention to finding sustainable solutions for travel. Solar
Impulse is one of a kind, but there are also more down-to-earth projects
focusing on sustainability. Major Swiss companies regularly look to the
building sector for environmentally friendly-focused solutions in
construction.
Other factors which contribute to its technological readiness are,

 CERN, an important international research infrastructure is

domiciled in Switzerland.
 Switzerland spends about 3% of its GDP on research and
development.
 About 1.2% of worlds total scientific research papers are from
Swiss researchers.
 Switzerland is worldwide the leading country with 3.2 publications
per 1000 inhabitants.

10TH PILLAR: MARKET SIZE

10th pillar:Market size

4.85
4.8
4.75
4.7
4.65
4.6
4.55 10th pillar:Market size
4.5
4.45
4.4
4.35
The size of the market affects productivity since large markets allow firms to
exploit economies of scale. Traditionally, the markets available to firms have been
constrained by national borders. In the era of globalization, international markets
have become a substitute for domestic markets, especially for small countries. Vast
empirical evidence shows that trade openness is positively associated with growth.
Even if some recent research casts doubts on the robustness of this relationship,
there is a general sense that trade has a positive effect on growth, especially for
countries with small domestic markets

Thus exports can be thought of as a substitute for domestic demand in determining

the size of the market for the firms of a country. Switzerland has always been open
to foreign trade which plays a major role in stimulating a dynamic and resilient
economy .It has sound regulatory environment and minimal barriers to
entrepreneurial growth which makes its market highly competitive .Trade has
always been an important contributor to Switzerland’s economy and a vital
element in the rapid expansion of the market size in the recent years. The value of
exports and imports taking together equals 115% of GDP. Switzerland has seen
steady growth in market size in recent years .The industries and companies have
been financed with different dimensions.

In the recent years a lot of investment has flowed into consumer and retail sector,
traditional industrial companies ,technology and communication .the Swiss market
is much diversified with its fingers in every pie be it retail ,labor ,trade,
ecommerce, import –export and so on.
 11TH PILLAR: BUSINESS SOPHISTICATION

11th pillar:Business sophistication

5.95

5.9

5.85

5.8

5.75 11th pillar:Business

sophistication
5.7

5.65

5.6

There is no doubt that sophisticated business practices are conducive to higher

efficiency in the production of goods and services. Business sophistication
concerns two elements that are intricately linked: the quality of a country’s overall
business networks and the quality of individual firms’ operations and strategies.
These factors are especially important for countries at an advanced stage of
development when, to a large extent, the more basic sources of productivity
improvements have been exhausted. The quality of a country’s business networks
and supporting industries, as measured by the quantity and quality of local
suppliers and the extent of their interaction, is important for a variety of reasons.
 12TH PILLAR: INNOVATION

12th pillar:Innovation
5.85
5.8
5.75
5.7
5.65
5.6
5.55 12th pillar:Innovation
5.5
5.45
5.4
5.35

Innovation can emerge from new technological and non-technological knowledge.

Non-technological innovations are closely related to the know-how, skills, and
working conditions that are embedded in organizations and are therefore largely
covered by the eleventh pillar of the GCI. The final pillar of competitiveness
focuses on technological innovation. Although substantial gains can be obtained by
improving institutions, building infrastructure, reducing macroeconomic
instability, or improving human capital, all these factors eventually run into
diminishing returns. The same is true for the efficiency of the labor, financial, and
goods markets. In the long run, standards of living can be largely enhanced by
technological innovation. Technological breakthroughs have been at the basis of
many of the productivity gains that our economies have historically experienced.

Innovation is particularly important for economies as they approach the frontiers of

knowledge, and the possibility of generating more value by merely integrating and
adapting exogenous technologies tends to disappear.
 Due to the quality of education & focus of the educational
institutions toward research, attract private firm to invest more in
R&D of country. Main benefits of R&D comes from
Pharmaceutical industry.
 Two third of R&D investment was done by private firms. Small &
medium level enterprises are spread over country, their
involvement in the process make the R&D more productivity.
 The confederation was providing fund to research & innovation
through Swiss national science foundation & CTI.
 MNCs are major investor in R&D sector of Switzerland because of
fallowing advantage:-
o Laws & policy regarding the protection of patents,
intellectual property is outstanding.
o Switzerland holds highest number of patents in worldwide &
leadership in scientific research.
o Switzerland is the home of some of the world’s best
universities & research institution.
o There is a strong platform for collaboration among
universities & MNCs that help for idea exchange.
 Conclusion
First place in the GCI rankings, for the seventh consecutive year, goes to
Switzerland. Its strong performance in all 12 pillars of the index explains its
remarkable resilience throughout the crisis and subsequent shocks. Although
innovation and technology are gaining importance as drivers of competitiveness
for Switzerland, advanced and emerging, the results this year show that all factors
of competitiveness are complementary and should be addressed simultaneously.
Making sustainable, long-term overall progress requires addressing gaps in all
pillars, laying the foundations for more vibrant economies with new productive
sectors. Switzerland arguably possesses one of the world’s most fertile innovation
ecosystems, combining a very conducive policy environment and infrastructure,
academic excellence, an unmatched capacity to attract the best talent, and large
multinationals that are often leaders in their sector as well as a dense network of
small- and medium-sized enterprises across sectors that has a reputation for quality
and a strive for innovation.