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Zug is the most competitive canton in Switzerland

Zurich/Basel | | Media Releases Switzerland

 

UBS has published the Cantonal Competitiveness Indicator for 2013. Zug, Zurich and Basel-Stadt have won podium spots. This year's new winners include the central Swiss cantons and both Appenzells.

Zurich/Basel, 7 March 2013 – UBS CIO Wealth Management Research has published the second annual Cantonal Competitiveness Indicator (Kantonaler Wettbewerbsindikator or KWI). This 10-factor analysis calculates the cantons' relative potential for improving their long-term economic performance.

The 2013 KWI identified Zug as the Swiss canton with the highest relative long-term growth potential. It moved up from third place last year. The other podium finishers are last year's winner and runner-up, Zurich and Basel-Stadt. They are followed by Aargau, Lucerne, Basel-Land and Nidwalden. Schwyz and Vaud are also highly competitive, relatively speaking. Appenzell Ausserrhoden stands out for its clear improvement among the mid-ranked cantons. The last four positions in the ranking are still filled by Jura, Uri, Valais and Graubünden, although Uri and Jura swapped places.

Driven by tax competition
The big winners compared to last year are the central Swiss cantons and both Appenzells. These key players in recent tax competition have slashed tax burdens for companies. This tax policy requires healthy public finances and low inherited burdens; the central Swiss cantons and both Appenzells have the lowest debt levels in Switzerland. Their tax policies have sparked corporate growth and fueled an influx of highly skilled workers.

The city cantons of Basel-Stadt and Geneva and the Jura mountain cantons (Bern, Solothurn, Neuchâtel and Jura) have declined in relative competitiveness year-on-year. Characterized by high tax burdens and relatively high government debt, they also suffer from structural problems. First, prospects have dimmed for key regional sectors of industry, except watch making. Second, these cantons face the long-term challenge of an aging population, which is shrinking the future labor force. Finally, they lack the financial resources to boost long-term competitiveness by slashing tax rates. The watch-making industry's current boom, however, provides a great opportunity for the Jura cantons to reduce their structural problems and regain attractiveness.

2013 Cantonal Competitiveness Indicator (KWI)

2013 Cantonal Competitiveness Indicator (KWI)

Source: UBS

Interpretation of the KWI
UBS's Cantonal Competitiveness Indicator (KWI) compares the economic competitiveness of the cantons. Competitiveness describes a canton's potential for raising its long-term economic performance. The KWI tracks relative economic competitiveness using a scoreboard. The higher a canton's KWI value, the more competitive it is relative to the others. A low KWI score means that a canton has below-average growth opportunities in comparison to the other cantons, not that it necessarily has low or absolutely no potential for growth. Since many highly regarded studies rank Switzerland among the most competitive countries in the world, even low KWI cantons are still internationally competitive.

The differences between some cantons are slight. Any interpretation of the KWI has to consider the cantons' individual conditions, such as geographical or historical circumstances, that could limit their potential for growth. The KWI is not a quality of life indicator either, since it concentrates exclusively on a canton's potential for economic growth.

The 10 pillars of competitiveness
Each canton receives a 10-dimensional strength/weakness profile based on the evaluation of the individual pillars. This multidimensional examination of each canton's economy provides a flexible tool for making regional strategic decisions on various issues. By way of example, the profile for Zug, the most competitive canton, is explained below.

The 10 pillars of competitiveness

The 10 pillars of competitiveness

Source: UBS

The profiles of all cantons can be viewed in the Cantonal Competitiveness Indicator report at the following link: www.ubs.com/kantonalerwettbewerbsindikator-en.

UBS AG


Contact


Elias Hafner
Economist WM Real Estate & Swiss Regional Research
Tel. +41-44-234 48 03

Dr. Matthias Holzhey
Economist WM Real Estate & Swiss Regional Research
Tel. +41-44-234 71 25

Claudio Saputelli
Head WM Real Estate & Swiss Regional Research
Tel. +41-44-234 39 08


The Cantonal Competitive Indicator report can be viewed online at the following link: www.ubs.com/kantonalerwettbewerbsindikator-en.


www.ubs.com