Switzerland Must Become More Innovative, Suggests Report

by Ulrika Lomas, Tax-News.com, Brussels

27 January 2009

Facing increased competition from abroad, Switzerland, with its long tradition of pioneering spirit, must urgently adapt to meet the changing demands of multinationals to maintain its status as an international centre for innovation.

A recent study, a joint project between Swiss-American Chamber of Commerce and the Boston Consultancy Group, has concluded that Switzerland must immediately react to the threat posed by the growth of its rivals, or face alarming consequences for its national economy.

Eager to strengthen their research capacity, and able to offer the latest in terms of infrastructure, many Asian and Middle Eastern countries, such as Singapore, are now forging ahead in enticing global research and development investment, and, consequently, threaten to reduce Switzerland’s economic output by 2% a year unless a long-awaited overhaul of the Swiss system is implemented.

Innovation plays a vital role in Switzerland, and, with its dynamic approach to the creation of intellectual property, its first-rate universities and research institutions, combined with a highly skilled workforce, it has always stood out as an ideal innovative location.

Yet in the past, Switzerland has not taken advantage of its creative environment, the report notes. Over the course of the last 25 years, its net Gross Domestic Product (GDP) has only progressed very slightly.

Innovative industries, often referred to as ‘les pilliers de la richesse’ or pillars of wealth for the economy, account for 35% of GDP. However, multinationals operating in these innovative industries make up three quarters of the total. Switzerland’s dependency on multinationals represents a risk for the economy, the report observes. Consequently, the country needs to be more innovative and react better to their changing demands, particularly given that they review their location on average every five years, and given the recent emergence of a number of countries vying for the much coveted pole position in global innovation.

The report, therefore, recommends five areas for improvement, designed to preserve Switzerland’s status:

• Improve the skills and competences of the country’s science, engineering and technology workforce.
• Facilitate the immigration of highly-skilled workers.
• Create a culture and environment favourable to the creation of businesses.
• Establish regulations aimed at supporting innovation.
• Promote Switzerland as a preferred location for business and innovation.

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