To give you an answer shortly, Switzerland has not been one of the "poorest countries in Europe", this honor corresponds to the peripheries of Southern, Eastern and Southeastern Europe. Switzerland has benefited a lot from its geographical location and, although it has improved its performance in recent years, at no time in the last millennium was much poorer than France or Germany (it was slightly poorer, yes, but it is like saying that Argentina is slightly poorer than Uruguay, the difference was very small)
Already entering the subject: there is a branch of economics called Economic Geography and is essentially about solving the problem of what they call the tyranny of the location.
What is this? Simple: it is the fact that, in geographic terms, wealth attracts wealth and productivity attracts productivity. The rich regions tend to become richer and enrich their closest neighbors, for example, if you wanted to develop in the nineteenth century, the best you could do was to be close to England. Is seriously. When a statistical analysis is made, it is the variable that matters the most.
The tyranny of the location can be overcome. It was achieved (half) by the United States, which has a similar level of wealth in all its territory, and the Nordic countries achieved it, despite being "far" from the European core they are among the most developed in the region. But doing it is difficult.
And Switzerland? Well, Switzerland is in all the half of what we can call the "Manchester-Venice Line", line (well, rather like a half moon) that traces the historical origins of capitalism, first in northern Italy (S. -XV), then in western Germany and Amsterdam (16th-17th century) and finally in southern England (18th-19th centuries). London would cease to be the center of the capitalist world around 1920, of course, but that is another story. This map seems fascinating to me, because it shows in great detail the result of this historical process:
Switzerland, as you can see, is in the whole half of the line. But according to this, Switzerland should never have been a poor country, because it has always benefited from its geographical position. So what happened?
Simple. That Switzerland, in per capita terms, has never been poor. Yes, at some point it went from being below-average income to income above average (in European terms), and I would say that it had to do with an exceptional system of government, but never made a "great appearance", as they did Korea after the war or Japan in the two generations that followed the Meiji Restoration:
I found two different calculations in Wikipedia, one of which puts Switzerland above the average since 1830, the other puts it below the average until 1870, but in both cases the country follows closely the other European economies:
Here we see that at no time did the GDP per capita in Switzerland go below 65% of the English economy, the leader of the region. This in current terms (and comparing with USA which is the leading country today) would be like having a GDP per capita of about 35 thousand dollars, more or less of the order of South Korea.
Here we see a different calculation in which Switzerland, by 1820, has a GDP per capita equivalent to 63% of the British. In both cases the result is almost the same. If we go further back, in 1700 the GDP per capita Swiss was 71% of the British, but in this period the leading economy was the Netherlands, and Switzerland had just one wealth per head equivalent to 41% of this country. But, if we look, it is not far from the European average and it surpasses or almost equals countries like Austria, France or Germany.
People get an idea of 18th-century Switzerland as a barren, ruined region of men who had to be sold as mercenaries to eat. But Switzerland really has always been around the European economic average, and it has only been poor if we consider Europe as a whole as poor. And well, this has not really been the case in, I would say, at least half a millennium.
Switzerland is a land locked country with very little natural resources. The region is very mountainous and a small country relative to other countries surrounding it.
Switzerland is a neutral country that doesn't get involved in wars. Whilst it's neighbors have been fighting over the centuries Switzerland hasn't needed to spend money on it's military.
Due to being neutral it has attracted world banking as it has been as a safe haven. Industrialists who made money during the war invested heavily in the Swiss banking system making it a huge industry on its own.Due to very limited resources the people have concentrated on education and personal skills. Switzerland is known as the watch and precision instrument capitol of the world.
Due to the mountainous region dams were built and creates more than enough hydro electricity for itself and exports to it's neighbors.
If we look at a list of Swiss companies that have established high end brands around the world and are known for quality you will see why Switzerland is rich today.
image source montageafrica.com
It turns out that banking is incredibly profitable ;)
Switzerland's Rise to a Wealthy Nation
This paper battles that financial contention and political contestability are two key determinants of the viable progression of the Swiss economy in the nineteenth and twentieth century. We portray how Switzerland progressed from a decently poor country with no typical resources and net movement in 1800 to a standout amongst the most indulgent countries of the world two hundred years sometime later. In perspective of quantitative and emotional evidence, we battle that early internationalization, open and versatile markets and a high degree of contention were significant for the headway of the Swiss economy. Additionally,
Swiss political system with its immediate dominant part manage segments and the completed manage of subsidiarity made political contestability that took care of government viability and incited political soundness since until the end of time. The mix of thesesegments seems to illuminate the Swiss accomplishment, yet moreover to make it troublesome for other countries to get. Watchwords: Switzerland, enhancement, improvement, contention, contestability
We should need to thank the individuals from the UNU-WIDER assembling on Country
Great precedents for Development Success in Helsinki, particularly our discussant Matti Viren, for their information. We in like manner benefit by feedback given by Herbert Grubel,
Ronald Jones and Geoffrey Miller to an earlier type of this paper. Because of Beat Spirig for his wonderful help as for the data collection.
Switzerland is generally known for its mountains and lakes, well-working structure and shocking things and organizations. Some would relate
Switzerland with chocolate, watches and cheddar. Others may think about Swiss banks and overall associations or of Geneva as the host to general relationship, for instance, the World Trade Organization (WTO). Regardless, in particular, everybody would consider
Switzerland being a rich country. Honestly, it has been among the most extreme nations of the world for quite a while.
Allow us to imagine for a moment how Switzerland and its perspectives would have looked like around 200 years earlier. The mountains and lakes were there—anyway there was little else.
Switzerland was a poor country. Tolls included officers of fortune that served in outside military. The country had no ordinary resources and was displayed to an extensive variety of social orders and effects that created strains and conflicts since until the end of time. There was a net resettlement of people. To be sure, even after the take-off of the industrialization in the second half of the nineteenth century, the lifestyle in this country remained behind that of other European countries.
A short history of the budgetary headway of Switzerland
We start by chronicle diverse pointers that warrant considering the Swiss economy a case of conquering affliction. This evaluation should be established on a more drawn out time recently years, given the whole deal perspective of our examination. We by then base on the arranging of the money related take-off.
A case of defeating affliction?
Table 1 reports different markers for Switzerland and other basically indistinguishable economies. The primary section shows add up to national yield (GDP) per capita in US dollars, changed as per securing power correspondence (PPP), found the center estimation of all through the latest 30 years (1975 to 2005). This marker depicts the yield or wage delivered by the age factors used inside as far as possible and along these lines uncovers to us something about the execution of the economy, institutionalized per tenant. With US$22,547,
Switzerland positions second behind the United States (US$23,081) and before Norway (US$22,180). The second and third segments report net national compensation (GNI), or net national thing (GNP), per capita which delineates wage made by all age factors controlled by the country's tenants used at home or abroad; it addresses a prevalent measure for the lifestyle than GDP. Switzerland (US$23,731) positions first before the United States (US$23,073) and Norway (US$21,884) in case the PPP-adjusted figures, found the center estimation of more than 1975 to 2005, are taken. Note that
Switzerland situated second for apparent GNP per capita in 2006 at current US dollars, behind Norway and before Denmark.