Question 1: Has the Swiss political system helped the Swiss economy benefit from European integration? Has it led to an appropriate response to the difficulties experienced in the euro area?
Answer: The political system has helped Swiss economy maintained its neutrality and independence from EU while also enjoy all the benefits from European integration. Although the Swiss government has tried to curb Eurozone difficulties by pegging CHF to Euro, effectiveness of this measure has been limited.
1) Swiss political system is stable, highly decentralized and independent (direct democracy) and hence is very attractive to foreign investors looking for stable governments.
Most of the decisions are taken based on majority of votes and hence in some sense there is no real “opposition” and limited corruption. The system is divided into cantons, communes and hence individuals have quick access to the government. Further, even individuals can draft initiatives on which everyone can vote. Due to this direct democracy, Switzerland is able to enjoy neutrality and independence from other countries. This stability is clearly reflected in stable GDP growth (about 2-3%), low unemployment rate, consistent private investment, government spending and debt as % GDP reducing over time. This stability (and other economic factors such as taxes) was in part responsible for attracting corporations towards Switzerland.
2) Switzerland’s desire to maintain autonomy forced it to establish bilateral agreements with EU; success of these agreements have de-incentivized Switzerland from joining EU.
Switzerland did not enter EU mainly because of voters did not want Switzerland to loose its autonomy.
However, geographically speaking, Switzerland is crucial for EU as Switzerland is in the middle of EU zone and critical to have free movement of goods and labor through Switzerland. Hence, EU negotiated bilateral agreements with Switzerland. These agreements helped Swiss economy gain...