The economy of Switzerland: the basis, structure and features

2024 Author: Henry Conors | [email protected]. Last modified: 2024-02-12 02:53

The Swiss economy is one of the most stable in the world. The country is an example of how perseverance, hard work and a competent approach to building a model of economic relations turned a small state into a capital turnover center. In addition to having a developed banking system, Switzerland occupies a leading position in manufacturing and tourism, which positively affect its status in the global community.

From backwardness to success

For a long time, the Swiss economy lagged far behind other European countries. A protracted agrarian-patriarchal period dragged the state down, blocking the path of development. The first steps towards success were taken in the 16th-17th centuries in the mountainous areas, where trade and industry began to develop intensively. There were factories for the production of cotton and silk fabrics, watches. In the 19th century, tourism developed, a new sport was founded - mountaineering, which gained worldwide recognition.

Despite the poor conditions for farming and agriculture, Switzerland has focused on dairy production. New branches of industry were being mastered,the country increased its exports. At the same time, a railway line is being developed. At the beginning of the 20th century, the National Bank was founded. Switzerland becomes the largest exporter of capital.

Stagnation period

On the eve of the Second World War and throughout it, Switzerland is also going through difficult times: the country's economy has “stood up”. Decreased production volumes. But after 1945 the situation began to improve. Exports have almost doubled. The rise of the economy primarily led to a high demand for industrial equipment from post-war countries and a lack of competition. In general, its formation in the second half of the 20th century was uneven: the heyday was replaced by a crisis, and vice versa. The political convictions of the country's government played an important role in the development of the economy: while maintaining neutrality throughout the world wars and conflicts, Switzerland has become an advanced state.

The main factor pulling Switzerland down in the post-war period was the high difference in the participation of agriculture and trade in the country's economy. After the market conditions more or less leveled off, the state gained stability and success.

Features of economic development

Even in the XVI-XVII, the right decision was made on the direction of the country's activities. Switzerland possesses a territory, most of which is unsuitable for agriculture; there are no minerals, except for rich nature. A reasonable manager will understand that it is necessary to create something of his own or rapidly develop what has already been invented. This is what happened in Switzerland. High qualityof manufactured products became known to all states, the share of exports began to grow, and the economy began to flourish. Having received enough capital from one industry, the country developed another. Thus, the main areas of light industry and pharmaceuticals were mastered. Not only did new factories open here, but many global concerns were created that exist to this day.

The main features of the economy in Switzerland are built primarily on the skillful ability to use their advantages to the maximum. Despite the small territories for agriculture and cattle breeding, dairy farming was developed, the most beautiful nature was used for the development of tourism and hotel business, turbulent rivers and mountainous terrain served as the basis for the development of hydropower. The ability to take everything from almost nothing is the main essence of the Swiss economy, which has turned the European state from backward to advanced.

The current state of the state

Switzerland today is the heart of finance and banking throughout Europe. The country's economy is a market one, based on international trade and the turnover of foreign capital. The state has a developed light, pharmaceutical and food industries, and mechanical engineering. The whole world knows about the high quality of goods exported from Switzerland - from gastronomy to watches and production equipment.

Features of a market economy in Switzerland, despite a number of its differences from other European countries, are easy to see: the state practically does not interfere in the activities of enterprises, the market is focused on buyers, there ismultiple forms of ownership. The dynamic development of the country only confirms that the right strategy for building economic relations has been worked out. Moreover, the situation is equally successful both within the country and in external relations.

What is the Swiss economy based on today? First of all, these are banks, of which there are a lot. Including branches, there is one institution for every 1,500 people. In addition to the quantity, the quality of service is also high. The data of depositors is carefully classified, and it is almost impossible for third parties to know them. The influx of foreign capital strengthens the economic position of the country and brings great benefits.

Sectoral structure of the Swiss economy

This is one of the most developed countries with a high standard of living and virtually no unemployment. Thanks to the policy of neutrality, the country survived the world wars with virtually no losses. Today, Switzerland thrives on developed sectors of the economy founded in the last century. They include:

• production of equipment, watches;
• light industry and pharmaceutical companies;
• agriculture;
• banking activities;
• tourism.

Compared to other developed countries, the number of transnational organizations in Switzerland is large. Their activities significantly affect the economic situation of the country. The state is famous for its well-established credit and financial system, low inflation and unemployment.

Industrial sector

The basis of the Swiss economy is industry, it was thanks to its development in the 19th century that the state began to flourish. Since the 18th century, the country has become known as a watch manufacturer. Having achieved success in this industry and established imports, it began to develop light and food industries. Textiles were in great demand among partners, but after the Second World War, the emphasis was on metallurgy and the chemical-pharmaceutical industry.

Today, the industrial sector consists of many manufacturing enterprises and global concerns. Most of the finished products are exported. Switzerland has established itself as a manufacturer of quality and durable products. The country's main industries are:

• Engineering - production equipment for printing, looms, electrical engineering are produced. About 40% of the industry's products are exported.
• Watchmaking is the highlight of Switzerland, almost all finished products are sent abroad for sale. They are known worldwide and are synonymous with we alth and quality.
• Pharmaceutical industry - in the pharmacy of almost every country you can find a drug from Switzerland.
• Food manufacturing - few people have heard of Swiss cheese or chocolate. The famous Nestle concern was founded here.

Features of the Swiss economy are reduced to a large variation in the volume of industry and agriculture. Average way of lifestates is built mainly on the second sector. Here you can see the opposite picture.

Foreign economic relations

Foreign trade is a well-established mechanism of the country, bringing it great profits and world recognition. The Swiss economy is built, in particular, on significant volumes of exports of industrial goods, medicines and food products. The main partners are the USA, EU countries, China, Japan.

The share of Swiss exports is almost half of GDP, which, of course, is a characteristic feature of the state's economy. The country is a member of the WTO, engaged in the liberalization of world trade. However, the Swiss domestic market remains closed: sometimes citizens are forced to travel abroad to make purchases.

Agriculture

Despite the fact that a third of the entire territory of Switzerland is unsuitable for agriculture, and another quarter is occupied by forests, the state provides itself with meat and dairy products, as well as wheat. This food is even produced in excess. Nevertheless, about 40% still have to be imported.

Switzerland's economy is aimed at using its strongest sides. Even in conditions that are negative for the development of agriculture, success has been achieved in dairy production and animal husbandry. Swiss cheeses have become some of the most famous and delicious in the world. The main agricultural products are beets, potatoes and wheat. Agriculture is most common inthe cantons of Zurich, Friborg, Aargau, Vaud, Bern, which is explained by their geographical location.

Energy & Minerals

Mountainous terrain, combined with turbulent rivers, provided the country with hydropower, which accounted for about half of all energy generated. For a long time, five nuclear power plants functioned and the construction of about 10 more was listed in the projects. After the Fukushima accident, the government revised its views on the use of nuclear power plants. A strategy has been developed that involves a complete phase-out of nuclear energy by 2050. However, some political parties in 2016 oppose the complete abandonment of nuclear power plants, since no alternative has been found, and nuclear energy provides about half of the state's electricity needs. It is also noted that it is in Switzerland that nuclear power plants are the most reliable and durable.

Development of hydropower is the main sector of the use of minerals, which are practically non-existent in the country. Oil and gas have to be imported from abroad. Reasonable use of natural resources, in this case, mountainous areas, has a positive effect on the economy of the state. Due to the fact that alternative sources of energy generation have not been found, the issue of decommissioning the nuclear power plant remains unresolved.

Banking

The structure of the Swiss economy does not consist only of the manufacturing and agricultural sectors. Attracting foreign capital is one of the main methods for the development of the state. Swiss banks are consideredthe most promising and reliable. Only in this country a depositor can not worry about the safety and security of his savings. All cash transactions are carried out using a special code. No one has the right to know the identity of a Swiss bank user. Intelligence agencies may only require data to be provided if a criminal offense has been confirmed.

Switzerland's unwavering neutrality attracts investors from all over the world. Even during the First and Second World Wars, the leaders of the participating states preferred to “hide” their hard-earned money precisely in Swiss banks. The continuous inflow of capital has a positive effect on the Swiss economy. The funds are used for the development of industry, small enterprises or as loans to other states. Zurich is the world's gold exchange. The well-being of almost the entire planet depends on the course being set in the future.

Interchange

Switzerland boasts a highly developed communication with other parts of the world. The country's economy, aimed at large volumes of exports, requires a good road junction. The railway tracks of the small state are among the best in Europe. Almost all of them are electrified.

Switzerland has only one navigable route to the sea - the Rhine River in the territory of Basel - Rheinfelden. The length of the section is 19 kilometers. A river port was built here to send industrial goods toother countries.

Tourism & Hospitality

More than 70% of the working-age population in Switzerland is employed in the service sector. It was here that the hotel business was born. Tourism brings a good income: about ten million people come to see the Alps every year, leaving the country a considerable amount. It is worth noting that for the high level of service and the delights of untouched nature, visitors pay all bills without regret.

The Swiss economy and its peculiarities of functioning are reduced to a high concentration on the strengths of the state. Virtually no country has been able to put together all its advantages and channel them in the right direction. Switzerland is an example of how one can build the strongest economy in the world from a favorable territorial position.