Switzerland Made Largest Gain In Competitiveness During 2004

by Ulrika Lomas, Tax-News.com, Brussels

13 May 2005

Switzerland has showed the most substantial improvement in competitiveness during 2004, according to an annual survey by the Lausanne-based management school, the IMD.

The IMD study revealed that Switzerland has moved up six places in the ranking to become the world's eighth most competitive economy. Those gains were largely the result of the restructuring of large Swiss companies, which are now performing well in international markets.

"When we look at the performances of the large Swiss companies, they have been extremely good. Finally restructuring is showing some results," Professor Stéphane Garelli, director of the IMD’s World Competitiveness Centre, told swissinfo.

"The small- and medium-sized enterprises that direct their activities towards exports have also had a very good year, despite the fact that the Swiss franc is a little bit strong compared with the dollar," he added.

With around SFr28 billion ($23.2 billion) in assets invested abroad Switzerland has the fourth highest level of investment worldwide as a proportion of gross domestic product, said Garelli.

Switzerland owns a total of almost SFr510 billion in assets abroad, which Garelli observed is almost as much as Japan.

Annualised estimates have shown that Switzerland attracted more than SFr14 billion in foreign investments in 2004, placing it in 12th position in the rankings. According to Garelli this is a sign that investors are looking beyond mere cost, to factors such as security and the skill level of the workforce.

The United States once again topped the rankings, followed by Hong Kong and Singapore.

"The vitality of entrepreneurship, the abundance of technology, the size of the capital market, the mobility of the workforce and the quality of infrastructure are just some of the formidable competitive assets which have so far maintained the US at the top of the competitiveness ranking," the IMD observed.

In Europe, Finland was the top-ranked EU member, coming in sixth in the overall table, with Denmark and Luxembourg also making it into the top 10.

However, the larger EU economies fared less well. The UK was ranked 22nd, Germany was ranked 23rd, while France was ranked 30th and Italy 53rd.

Nonetheless, the IMD noted that the link between rates of tax and competitiveness was inconclusive, observing that Denmark, Finland, Norway, Sweden and Belgium each have tax burdens in excess of 40%, but were relatively competitive economies.

Still, it argued that the EU's plan to liberalise its economy through a series of reforms know as the Lisbon Agenda have yet to produce "tangible results."

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