2013 Index of Economic Freedom

Switzerland

overall score81.0
world rank5
Rule of Law

Property Rights90.0

Freedom From Corruption88.0

Limited Government

Government Spending63.8

Fiscal Freedom68.1

Regulatory Efficiency

Business Freedom75.8

Labor Freedom87.9

Monetary Freedom86.2

Open Markets

Trade Freedom90.0

Investment Freedom80.0

Financial Freedom80.0

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Quick Facts
  • Population:
    • 7.8 million
  • GDP (PPP):
    • $339.9 billion
    • 1.9% growth
    • 1.7% 5-year compound annual growth
    • $43,370 per capita
  • Unemployment:
    • 4.2%
  • Inflation (CPI):
    • 0.2%
  • FDI Inflow:
    • $-196.5 million
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Switzerland’s economic freedom score is 81, making its economy the 5th freest in the 2013 Index. Its score is essentially the same as last year, with modest declines in business freedom and the management of government spending counterbalanced by improvements in monetary freedom and freedom from corruption. Switzerland is ranked 1st out of 43 countries in the Europe region.

The Swiss economy is diversified and modern, with high levels of prosperity and institutional strengths that include strong protection of property rights and minimum tolerance for corruption. The judicial system, independent and free of corruption, enforces contracts reliably. Openness to global trade and investment has enabled Switzerland to become one of the world’s most competitive and flexible economies. Despite some stress in the financial system, the country has emerged from the global economic turmoil relatively unscathed.

The public sector remains efficient and fiscally sound. Switzerland’s government spending cap, known as the “debt brake,” has been in force since 2003. With a transparent and stable business climate, Switzerland has created a vibrant entrepreneurial environment. Commercial operations are aided by monetary stability and an efficient labor market. Foreign investment is welcome, and investors benefit from access to adequate sources of credit in the competitive financial sector.

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Background

Switzerland’s federal system of government disperses power widely, and executive authority is exercised collectively by the seven-member Federal Council. Switzerland has a long tradition of openness to the world but jealously guards its independence and neutrality. It did not join the United Nations until 2002, and two referenda on membership in the European Union have failed by wide margins. Membership in the European Economic Area was rejected by referendum in 1992. Switzerland is one of the world’s richest and most investment-friendly countries, with a well-developed financial services industry. In addition to banking, the economy relies heavily on precision manufacturing, metals, pharmaceuticals, chemicals, and electronics.

Rule of LawView Methodology

Property Rights 90.0 Create a Graph using this measurement

Freedom From Corruption 88.0 Create a Graph using this measurement

Protection of property rights is strongly enforced, and an independent and fair judicial system is institutionalized throughout the economy. Commercial and bankruptcy laws are applied consistently and efficiently. Intellectual property rights are respected, and enforcement is consistent with world standards. Effective anti-corruption measures discourage bribery of public officials and uphold the integrity of government.

Limited GovernmentView Methodology

Taxation is more burdensome at the cantonal levels than at the federal level. The top federal income tax rate is 11.5 percent, with the combined tax rate as high as 41.5 percent. The federal corporate tax rate is 8.5 percent, but the joint rate can be as high as 24 percent. The overall tax burden equals 29.8 percent of total domestic income. Government spending equals 34.7 percent of GDP, and the “debt brake” has shored up fiscal health despite slow regional growth.

Regulatory EfficiencyView Methodology

The competitive regulatory framework strongly supports commercial activity, allowing business formation and operation to be efficient and dynamic. The pace of improvements in regulatory efficiency has slowed in comparison to other economies. Labor regulations are relatively flexible, and provisions concerning work hours have been eased. Monetary stability has been maintained in the face of pressure from the eurozone crisis.

Open MarketsView Methodology

The trade-weighted average tariff rate is zero, and there are relatively few non-tariff barriers. Switzerland continues to be open to foreign investment, and the investment code is transparent and efficiently administered. The modern and highly developed financial sector provides a wide range of financing instruments. Despite the challenging external environment, banks remain well capitalized and sound.

Country's Score Over Time

Bar Graph of Switzerland Economic Freedom Scores Over a Time Period

Country Comparisons

Bar Graphs comparing Switzerland to other economic country groups

Regional Ranking

rank country overall change
1Switzerland81-0.1
2Denmark76.1-0.1
3Ireland75.7-1.2
4Estonia75.32.1
5United Kingdom74.80.7
6Luxembourg74.2-0.3
7Finland741.7
8The Netherlands73.50.2
9Sweden72.91.2
10Germany72.81.8
11Georgia72.22.8
12Lithuania72.10.6
13Iceland72.11.2
14Austria71.81.5
15Czech Republic70.91.0
16Norway70.51.7
17Armenia69.40.6
18Belgium69.20.2
19Cyprus69-2.8
20Slovakia68.71.7
21Macedonia68.2-0.3
22Spain68-1.1
23Malta67.50.5
24Hungary 67.30.2
25Latvia66.51.3
26Poland661.8
27Albania65.20.1
28Romania65.10.7
29Bulgaria650.3
30France64.10.9
31Portugal63.10.1
32Turkey62.90.4
33Montenegro62.60.1
34Slovenia61.7-1.2
35Croatia61.30.4
36Italy60.61.8
37Serbia 58.60.6
38Bosnia and Herzegovina57.30.0
39Moldova55.51.1
40Greece55.40.0
41Russia51.10.6
42Belarus48-1.0
43Ukraine46.30.2
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