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Growth triangle Basel-Zurich-Central Switzerland

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Zug is the most competitive canton in Switzerland, followed by Zurich and Basel-City. That's according to the Cantonal Competitiveness Indicator 2014. It also reveals that the cantons as a whole face various challenges, such as the realization of the mass immigration initiative, planned corporate tax reforms and a shrinking workforce, that could limit growth.

Zurich/Basel, 4 March 2014 – The UBS Chief Investment Office has published the Cantonal Competitiveness Indicator (Kantonaler Wettbewerbsindikator or KWI) 2014. The KWI uses a 10-dimensional analysis to calculate the cantons' relative potential for improving their long-term economic performance.

The 2014 KWI identified Zug and Zurich as the Swiss cantons with the highest long-term growth potential. Basel-City, Basel-Country and Aargau as well as Lucerne, Nidwalden and Schwyz in Central Switzerland all boast above-average competitiveness. The middle ranks were filled with solidly competitive cantons led by Vaud and Geneva in western Switzerland. Graubünden, Valais, Uri and Jura make up the group of cantons with relatively low competitiveness.

Growth leaders through to 2025

According to the KWI there is a clear growth triangle that consists of Basel, Zurich and Central Switzerland. If recent economic growth is extrapolated to 2025, a model calculation (see page 4) implies real growth rates in excess of 2% per year for the cantons inside this triangle. Growth in Bern, eastern and western Switzerland − with the exception of Vaud − should be slightly lower than the national average. The slowest growth is expected in Jura and Uri. Slightly more than 1% annual growth is predicted for the two mountain cantons of Valais and Graubünden.

The challenge of the mass immigration initiative

The assumption made regarding future economic growth is based on the anticipated positive development of the Swiss economy. Yet the adoption of the mass immigration initiative could negatively affect Switzerland's growth potential. On the one hand, tensions within the EU could restrict European market access. This would cause cantons where EU exports account for a significant share of economic performance to suffer. On the other hand, mandatory quotas could limit the pool of potential workers and make them more expensive. Given that Ticino, Geneva and Vaud have experienced a steady rise in employment in recent years mainly due to cross-border commuters and immigrants, quotas would affect these cantons the most. Tourism would also be hurt in the competitiveness race without low-cost labor from abroad, which would especially affect Graubünden and Valais.

2014 Cantonal Competitiveness Indicator (KWI)

Source: UBS

Interpretation of the KWI

The KWI compares the economic competitiveness of the cantons. Competitiveness describes a canton's potential to raise 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 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

At the heart of the KWI is a 10-dimensional analysis of a canton's strengths and weaknesses. This multidimensional examination of each canton's economy provides a flexible tool for making regional strategic decisions and highlights areas where action is needed. Businesses and investors can leverage this information when choosing where to locate, and it helps cantons position themselves to face forthcoming challenges. By way of example the profiles for Zug, the canton with the highest relative competitiveness, and for Jura, the canton with the lowest relative competitiveness, are included:

Source: UBS

The profiles of all cantons can be viewed in the Cantonal Competitiveness Indicator report at the following link:

Growth triangle Basel-Zurich-Central Switzerland
Estimated annual growth potential through 2025

Source: UBS



Elias Hafner, economist
Main person responsible for the KWI
CIO Swiss & Global Real Estate
Tel. +41 44 234 48 03

Dr. Matthias Holzhey, economist
CIO Swiss & Global Real Estate
Tel. +41 44 234 71 25

Claudio Saputelli, economist
Head CIO Swiss & Global Real Estate
Tel. +41 44 234 39 08

The Cantonal Competitive Indicator report can be viewed online at the following link: