2015 Index of Economic Freedom

Switzerland

overall score80.5
world rank5
Rule of Law

Property Rights90.0

Freedom From Corruption85.0

Limited Government

Government Spending65.1

Fiscal Freedom70.3

Regulatory Efficiency

Business Freedom78.1

Labor Freedom75.3

Monetary Freedom86.3

Open Markets

Trade Freedom90.0

Investment Freedom85.0

Financial Freedom80.0

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Quick Facts
  • Population:
    • 8.0 million
  • GDP (PPP):
    • $371.6 billion
    • 2.0% growth
    • 1.2% 5-year compound annual growth
    • $46,430 per capita
  • Unemployment:
    • 4.4%
  • Inflation (CPI):
    • -0.2%
  • FDI Inflow:
    • $-5252.1 million
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Switzerland’s economic freedom score is 80.5, making its economy the 5th freest in the 2015 Index. Its score has decreased by 1.1 points since last year, with modest improvements in business freedom, fiscal freedom, and monetary freedom overwhelmed by a large decline in labor freedom and smaller declines in freedom from corruption and the management of government spending. Switzerland is ranked 1st out of 43 countries in the Europe region.

Switzerland has enjoyed economically “free” status since 2010. With an economy that benefits from sound fundamentals that include monetary stability, low public debt, and a vibrant employment market, the Swiss economy has weathered the global economic uncertainty well.

Switzerland continues to be a regional leader in economic freedom. Efficient and transparent regulations underpin an efficient business environment and support diversified economic growth. Openness to global trade and investment is firmly institutionalized, buttressed by a dynamic financial sector and a well-functioning independent judiciary. Switzerland has a strong tradition of reliable protection of property rights, and the legal system is transparent and evenly applied. Effective anti-corruption measures are in force.

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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. It has 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 85.0 Create a Graph using this measurement

Switzerland was ranked 7th out of 177 countries in Transparency International’s 2013 Corruption Perceptions Index. 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 enforced.

Limited GovernmentView Methodology

Switzerland’s tax system operates mostly on the cantonal level. The top effective federal income tax rate is 11.5 percent, and the combined rate can be over 40 percent. The federal corporate tax rate is 8.5 percent, but the combined rate can reach 24 percent. The tax burden is equal to 28.2 percent of the economy, and public expenditures are equivalent to 34.1 percent of domestic production. Public debt equals 50 percent of GDP.

Regulatory EfficiencyView Methodology

The competitive regulatory framework promotes business formation and operational efficiency. With no minimum capital required, starting a business involves six procedures. Labor regulations are still relatively flexible. Proportionately, Switzerland’s agricultural subsidies are among the highest in the world and dampen innovation in agriculture, but the government did cut solar subsidies by 10 percent in 2014.

Open MarketsView Methodology

Switzerland has a 0 percent average tariff rate and is a member of the European Free Trade Association. Agricultural subsidies are significant. Foreign and domestic investments are generally treated equally. The highly competitive and well-developed financial sector offers a wide range of financial services and encourages entrepreneurial activity. Banking regulations are sensible, and lending practices are prudent.

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 Download Charts

Regional Ranking

rank country overall change
1Switzerland80.5-1.1
2Estonia76.80.9
3Ireland76.60.4
4Denmark76.30.2
5United Kingdom75.80.9
6Lithuania74.71.7
7Germany73.80.4
8The Netherlands73.7-0.5
9Finland73.40.0
10Luxembourg73.2-1.0
11Georgia730.4
12Sweden72.7-0.4
13Czech Republic72.50.3
14Iceland72-0.4
15Norway71.80.9
16Austria71.2-1.2
17Latvia69.71.0
18Belgium68.8-1.1
19Poland68.61.6
20Cyprus67.90.3
21Spain67.60.4
22Slovakia67.20.8
23Armenia67.1-1.8
24Macedonia67.1-1.5
25Hungary 66.8-0.2
26Bulgaria66.81.1
27Romania66.61.1
28Malta66.50.1
29Albania65.7-1.2
30Portugal65.31.8
31Montenegro64.71.1
32Turkey63.2-1.7
33France62.5-1.0
34Italy61.70.8
35Croatia61.51.1
36Slovenia60.3-2.4
37Serbia 600.6
38Bosnia and Herzegovina590.6
39Moldova57.50.2
40Greece54-1.7
41Russia52.10.2
42Belarus49.8-0.3
43Ukraine46.9-2.4
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