THE LEGATUM PROSPERITY INDEX™ 2016

Bringing Prosperity to Life

Switzerland

Ranked 4th of 149

At a glance

Ranks

4 th on the Legatum
Prosperity Index™

4th
9th
6th
1st
3rd
8th
18th
16th
8th

SUB-INDEX RANKINGS

In the Prosperity Sub-Index rankings, Switzerland performs best on Education and Health and scores lowest on the Personal Freedom sub-index.

Visit our Rankings table to see how Switzerland compares to other countries.

Prosperity Gap

The ‘Prosperity Gap’ takes a country's GDP and uses it as the yardstick to measure a nation's expected Prosperity Index ranking.

As one of the world’s wealthiest liberal democracies, Switzerland, unsurprisingly, has a high prosperity surplus across all the sub-indices of the Prosperity Index, particularly in Governance. Switzerland’s ‘prosperity surplus’ is nearly 20 times larger than Hong Kong’s, which has a similar GDP per capita but is constrained by the lack of democracy and low personal freedom. It also outperforms Norway, which has a larger GDP per capita, though the UK, who’s GDP per capita is around a significant $17,000 per head less has a larger ‘prosperity surplus’ than Switzerland because of higher Social Capital and stronger levels of Personal Freedom.

Note:
In the chart above, each dot represents a country. The curve shows the general tendency with which prosperity increases as GDP per capita increases. If a country falls below the curve, then we can say that compared to all other countries, it is under-delivering prosperity for its citizens. Likewise, if a country rises above the curve, then we can say that it is over-delivering prosperity for its citizens. Learn more about the Prosperity Gap here.

Alternatively, have a look at the Prosperity Gap view on our Rankings table for a full list of countries and to see how each of them are performing on the various sub-indices.

Commentary

Switzerland outperforms other wealthy nations such as Luxembourg, Singapore, and Norway in Economic Quality, ranking 4th in this sub-index, up from 15th in 2007. Like other Western countries, its economy declined following the 2008 global financial crisis, but notably it is the only West European country - besides Malta - to see its score in Economic Quality improve over the past decade. Its economy is stable, prosperous, and highly specialized with very low unemployment. Its labour force participation rate is 83.4% (up 1.7% since 2007,) which is the 2nd highest in the OECD after Iceland. Switzerland benefits from minimal economic and trade barriers with the EU and trade barriers have been weakened over the past decade. 94% of those polled were satisfied with their living standards, the highest of OECD nations.

Switzerland weathered the global financial crisis better than much of Western Europe.
Switzerland weathered the global financial crisis better than much of Western Europe.

In the Business Environment sub-index, Switzerland ranks 9th and has seen little change over the past decade. Its low tax rates and flexible business climate have helped grow its strong private sector economy. Its hiring and firing practices are the most flexible in the OECD, while its financial services are the most affordable.

Switzerland has moved up two ranks to 6th in the Governance sub-index over the past decade. It is often described as the ‘cradle of direct democracy’: indeed, the Swiss go to the polls on average more than their European counterparts as they are asked to contribute in referenda on a variety of issues and can overturn decisions made in parliament. It is a system based on bottom-up governance, though its system might be difficult to export elsewhere given Switzerland’s small, relatively homogenous population. It also has one of the lowest levels of perceived corruption, ranked in the global top ten for low corruption, high judicial independence, and ranks in the top five globally for rule of law. This allows its democracy to flourish.

Interestingly, for general elections, Switzerland has the 2nd lowest voter turnout of the OECD, performing better than only the United States. Voter turnout has continued to decline – in the 2015 parliamentary elections, it was just 38.6%. This puts Switzerland in the global bottom 30 for voter turnout, which has been declining while confidence in the government has increased. 79% of those polled in 2016 were satisfied with the government, the most of the OECD. Are people so satisfied with Switzerland’s overall prosperity and performance that they don’t feel the need to vote? Perhaps. A part of this low turnout might also be because of its bottom-up governance system: people participate in other forms of votes (i.e. referenda) on a regular basis, and, as such are prone to ‘selective voting,’ i.e. voting only on specific issues that they care about.

Switzerland has the 2nd lowest voter turnout in the OECD, but the highest confidence in its national government!
Switzerland has the 2nd lowest voter turnout in the OECD, but the highest confidence in its national government!

Because its economy is so knowledge and skilled-base, it is crucial to have a quality education system to complement it. Switzerland ranks 1st in Education, a rank it has held for the past four years. Switzerland’s education system has a strong vocational focus which is geared towards further developing the country's unique industries. Secondary and tertiary education attendance has increased over the past decade: the average worker has 5.78 years of secondary education, the 2nd highest in the OECD after Germany.

Health continues be another of Switzerland’s strong suits: it ranks 3rd and has ranked in the global top five for the past decade. 93% of those polled expressed satisfaction with the quality of available healthcare, more than in any other OECD nation. Strong performance in Health is reflected in a growing life expectancy of 83 years, above the OECD average.

Switzerland performs well in Personal Freedom and Social Capital, ranked 18th and 16th respectively. Relatively speaking, there is some room for improvement here. While Personal Freedom has increased in the last ten years, Switzerland has been overtaken by Portugal and Finland because both legalised same-sex marriage while Switzerland has not. It is also one of the few European countries to still have mandatory conscription. Social Capital is high, but it has stagnated over the past decade. Civil society remains strong though: 31% say they have volunteered in an organisation and 53% say they have donated to charity within the last month.


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Data

How to read this graph:
When comparing multiple countries on a spider chart, data points that appear
further away from the center represent a better performance to the points that are closer to the center.