Compared to other countries, Switzerland maintains relatively high levels of Foreign Direct Investment (FDI). In 2016, FDI in Switzerland amounted to USD 750 billion. From a historical perspective, the importance of foreign investment is clear, with Swiss capital invested abroad almost triple what it was in 2000.
What is the story behind these numbers? Why has Switzerland become such a special place for business and innovation? After all, it is only a very small country with a commensurately small population. And there are hardly any natural resources that would make a substantial contribution to national wealth.
Switzerland has four national languages and 26 different cantons, each with its own individual authority in key areas of government such as tax, education and energy. At a national level there are seven Federal Councillors who work in an annual presidency based on a rotational system. A decision can only be made when a consensus is reached. But important decisions in a direct democracy such as Switzerland’s, tend to be made by the Swiss citizens themselves. The Swiss governmental system is built on the principle of federalism and subsidiarity; the Swiss only want the authorities to be involved when necessary. Responsibility and initiative are highly valued.
It is fair to say that Switzerland operates a complex political system where many players have considerable authority to decide and define solutions to problems. This means that in daily life, diversity of opinions and solutions is high. The result is that the best solution tends to come out ahead of weaker ones and serves as a model of best practice going forward.
These days, diversity is considered a major driver of innovation. It has been proven that diverse teams perform better and are more innovative than others. According to a new report from Times Higher Education, the top two ‘most international universities’ are in Switzerland and they also rank amongst the top performing universities worldwide. It is the international make-up of research teams that delivers the remarkable innovation capacity that we find in Switzerland. Maybe it is that only these factors have made Switzerland exceptional. Other than brains and ideas, business and trade, there is not much else in terms of resources to rely on. So the Swiss have developed an economic and social system that is built on the four pillars of innovation, technology, security and trust; thus creating a national spirit that embraces diversity to deliver innovation, performance and quality.
Switzerland provides a fertile ground for new ideas – in no other country are newly developed technologies and inventions better protected than in Switzerland. Additional assets include a healthy capital market, a broad offering of financial and insurance products and services, as well as long term economic and monetary stability. Over the last 150 years, the Swiss political system has proven to be exceptionally stable and reliable – and so has the social environment and the Swiss currency. Low inflation rates, low capital costs, a good investment climate and solid purchasing power make the Swiss economy one of the most liberal and competitive in the world. The country’s gross domestic product is considerably higher than the EU average.
Foreign workers and companies value the international outlook of the Swiss. Additional assets are personal freedom, an extremely well-preserved natural environment with clean lakes and rivers, and a well-developed infrastructure. The Swiss healthcare system is one of the best in the world.
These characteristics have helped Switzerland become a leading center for many industry sectors; this simplifies networking, partnering and access to new markets for investors. The Swiss have found a way to combine innovation and stability, security and confidence, performance and quality of life. The roots of the country – history, mentality, and heritage – go deep and feed the pillars that make Switzerland a great place for investors and also as one of the best places to live in the world.