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Switzerland A Small State between a Liberal and a Coordinated Market System

Explore Switzerland's economic system leaning towards liberal market Anglo-Saxon model over the coordinated market Continental European model. Examining labor market, welfare state, performance trends, and recent developments.

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Switzerland A Small State between a Liberal and a Coordinated Market System

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  1. Switzerland A Small State between a Liberal and a Coordinated Market System

  2. Thesis: Switzerland has an Economic System which tends more toward the Liberal Market Anglo-Saxon Model than towards the Coordinated Market Continental European Model

  3. Content: • Liberal and Coordinated economies • Labor Market, Welfare State, Performances • Recent Trends and Conclusion

  4. Liberal and Coordinated Economies: • Liberal market Economy (LME): • Coordination through market • Coordinated market Economy (CME): • Coordination through formal or informal networks

  5. Labor Market: • Liberal market Economy (LME): • Labor Force unionized to a minor degree • Weak peak labor and business organizations • No strong involvement of the state in the bargaining process • Coordinated market economy (CME): • Labor Force unionized to a high degree • Strong peak labor and business organizations • Involvement of the state in the bargaining process

  6. Labor Market: Labor Union Density (1985 - 1992) - Source: Hall/Soskice 95% 100% 57% 50% 37% 34% 32% 29% 15% 10% Ø Ø ► Tendency towards Liberal Market Economy

  7. Welfare State: • Liberal market Economy (LME): • Only partial developed Welfare state • Social benefits mainly contributed by private investment • Decommodification low • Taxes Low • Coordinated market economy (CME): • Fully developed Welfare state • Social benefits mainly contributed by employer or state • Decommodification medium – high • Taxes High

  8. Welfare State: Decommodification Index (2000) – Source: Scruggs/Allan 40 40 37 27 30 25 22 20 20 16 10 ► Tendency towards Liberal Market Economy

  9. Welfare State: Tax Burden (2000) - Source: OECD 54 50,1 50% 38,6 40% 32,2 32,1 30,6 30 30% 20% 10% ► Tendency towards Liberal Market Economy

  10. Performance: • Liberal market Economy (LME): • More Globalized economies • Recent lower unemployment rates • Coordinated market economy (CME): • Less globalized economies • Recent higher unemployment rates

  11. Performance: Unemployment rate (2004 – March 2007) - Source: OECD 9.4 - 6.9 10% 7.3 - 6.2 8% 6% 5.4 – 4.8 5.5 – 4.4 4.8 – 5.4 4.5 – 3.7 4.6 – 2.7 4% 2% ► Tendency towards Liberal Market Economy

  12. Recent Trends in Switzerland: 1990 – 2004 Total Government Expenditure / per year : + 3,5% Expenditure Social Welfare / per year: + 5,1% → 2004, 52% of government expenditure in favor of social welfare ► Tendency towards Coordinated Market Economy

  13. Recent Trends in Switzerland: 1990 – 2005 Development Tax Burden: + 4% (EU 1,2%, US – 0,5%) ► Tendency towards Coordinated Market Economy

  14. Recent Trends in Switzerland: 2000 – 2004 Growth rates: 2000: 3,6% 2001: 1% 2002: 0,3% 2003: - 0,2% 2004: 2% ► Tendency towards Coordinated Market Economy

  15. Thesis: Switzerland has an Economic System which tends more toward the Liberal Market Anglo-Saxon Model than towards the Coordinated Market Continental European Model however, recent developments indicate a slight turnaround

  16. Growth Measures Swiss Federal Council (2005): 1. More competition in the domestic market 2. More integration in the world market 3. Limitation of government expenditures 4. Maintain a high labor force participation rate 5. Maintain a competitive education system 6. Economic law should facilitate economic growth

  17. Literature Economie Suisse, Media Conference 2007, http://www.economiesuisse.ch/web/de/PDF% (accessed August 13 2007) Esping-Andersen Gosta, The Three Worlds of Welfare Capitalism, Cambridge: Polity Press, 1990 Hall, Peter A, David Soskice, Varieties of Capitalism, New York: Oxford University Press, 2001 Katzenstein, Peter J, Small States in World Market, London: Ithaca, 1985. OECD, Growth figueres, http://stats.oecd.org/WBOS/default.aspx?DatasetCode=CSP6 (accessed August 12 2007) OECD, Tax Burden 2000, http://www.oecd.org/dataoecd/44/0/1942482.xls (accessed August 12 2007) OECD, Unemployment Rate 2003 – 2007, http://stats.oecd.org/WBOS/Default.aspx?QueryName=251&QueryType=View (accessed August 12 2007) Phelps Edmund S, Dynamic Capitalism, New York: Wall Street Journal, Oct 10 2006. Rosser, J. Barkley, Marina V. Rosser, Comparative Economics in a Transforming World Economy, Cambridge: MIT Press, 2004 Scharpf, Fritz W, Vivien A. Schmidt, Welfare and Work in the Open Economy. From Vulnerability to Competitiveness. Volume 1 Oxford: Oxford University Press, 2000. Scruggs Lyle A, James P. Allan, Trends in Welfare State Decommodification in Eighteen Advanced Industrial Democracies 1972-2000, Paper for annual meeting of the American Political Schience Association, Philadelphia, PA, August 27/31, 2003, http://www.sp.uconn.edu/~scruggs/apsa03a (accessed August 14 2007) Switzerland, Federal Council, Das Wachstumspaket des Bundesrates: Stand der Umsetzungen Ende 2005, http://www.seco.admin.ch/themen/00374/00459/00460/index.html?lang=de (accessed August 11 2007) Wolf Martin, European corporatism needs to embrace market-led change, London: Financial Times, Jan 24 2007

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