2016 Index of Economic Freedom

Switzerland

overall score81.0
world rank4
Rule of Law

Property Rights90.0

Freedom From Corruption86.0

Limited Government

Government Spending66.3

Fiscal Freedom70.9

Regulatory Efficiency

Business Freedom82.2

Labor Freedom72.1

Monetary Freedom87.8

Open Markets

Trade Freedom90.0

Investment Freedom85.0

Financial Freedom80.0

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Quick Facts
  • Population:
    • 8.1 million
  • GDP (PPP):
    • $472.8 billion
    • 2.0% growth
    • 2.0% 5-year compound annual growth
    • $58,087 per capita
  • Unemployment:
    • 4.5%
  • Inflation (CPI):
    • 0.0%
  • FDI Inflow:
    • $21.9 billion
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The Swiss economy benefits from high levels of flexibility and institutional strengths that include strong protection of property rights and minimum tolerance for corruption. An independent and corruption-free judiciary enforces contracts effectively. Openness to global trade and investment has enabled Switzerland to become one the world’s most competitive and innovative economies.

Economic Freedom Snapshot

  • 2016 Economic Freedom Score: 81.0 (up 0.5 point)
  • Economic Freedom Status: Free
  • Global Ranking: 4th
  • Regional Ranking: 1st in Europe
  • Notable Successes: Rule of Law, Open Markets, and Regulatory Efficiency
  • Concerns: Control of Government Spending
  • Overall Score Change Since 2012: –0.1

With an efficient regulatory framework firmly institutionalized, Switzerland’s economic resilience is supported by a vibrant entrepreneurial sector. Monetary stability, an efficient labor market, and various financing options in the competitive financial sector aid commercial operations.

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Background

Switzerland’s federal system of government disperses power widely, and executive authority is exercised 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. One of the world’s richest and most investment-friendly countries, Switzerland has a well-developed financial services industry. After years of criticism by the EU and the U.S., Switzerland now publishes a list of foreign account holders. This has changed its reputation for banking secrecy, dating back to the 1930s. 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 86.0 Create a Graph using this measurement

The government is considered virtually free from corruption, and Switzerland was ranked fifth out of 175 countries in Transparency International’s 2014 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

Taxation is more burdensome at the cantonal levels than at the federal level. The top federal income tax rate is 11.5 percent, and the combined tax rate is as high as 40 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 27.1 percent of GDP. Government spending amounts to 33.5 percent of GDP.

Regulatory EfficiencyView Methodology

The competitive regulatory framework strongly supports commercial activity, allowing efficient and dynamic business formation and operation. Labor regulations are relatively flexible, and provisions concerning work hours have been eased. The central bank’s surprise January 2015 decision to discontinue its exchange-rate ceiling with the euro sent shock waves through global currency markets and prompted a rapid appreciation of the Swiss franc.

Open MarketsView Methodology

Switzerland has a 0 percent average tariff rate and is a member of the European Free Trade Association. Many agricultural imports are subject to non-tariff barriers. Domestic and foreign investors are generally treated equally under the law. 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 Download Charts

Regional Ranking

rank country overall change
1Switzerland810.5
2Ireland77.30.7
3Estonia77.20.4
4United Kingdom76.40.6
5Denmark75.3-1.0
6Lithuania75.20.5
7The Netherlands74.60.9
8Germany74.40.6
9Luxembourg73.90.7
10Iceland73.31.3
11Czech Republic73.20.7
12Georgia72.6-0.4
13Finland72.6-0.8
14Sweden72-0.7
15Austria71.70.5
16Norway70.8-1.0
17Latvia70.40.7
18Poland69.30.7
19Cyprus68.70.8
20Spain68.50.9
21Belgium68.4-0.4
22Macedonia67.50.4
23Armenia67-0.1
24Malta66.70.2
25Slovakia66.6-0.6
26Hungary 66-0.8
27Albania65.90.2
28Bulgaria65.9-0.9
29Romania65.6-1.0
30Portugal65.1-0.2
31Montenegro64.90.2
32France62.3-0.2
33Serbia 62.12.1
34Turkey62.1-1.1
35Kosovo61.4N/A
36Italy61.2-0.5
37Slovenia60.60.3
38Croatia59.1-2.4
39Bosnia and Herzegovina58.6-0.4
40Moldova57.4-0.1
41Greece53.2-0.8
42Russia50.6-1.5
43Belarus48.8-1.0
44Ukraine46.8-0.1
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