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Knife edge? Switzerland as a base for multinational companies as relations worsen with the European Union

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  • Simon J. Evenett

Abstract

During the past seven years, Swiss-EU economic relations have deteriorated, with the vote by the Swiss people in 2014 in favor of immigration limits bringing matters to a head. Using the latest available data on the financial performance of US multinationals operating across Europe, this paper estimates how large the revenue and cost shocks that could follow a rupture of Swiss-EU relations would need to be to alter return on investment calculations enough so as to possibly induce multinationals to relocate to other European locations. Of Switzerland's immediate neighbors, only Austria poses a potential threat in this regard. Excluding Europe's periphery, returns on US assets invested in the Netherlands fall just short of those in Switzerland.

Suggested Citation

  • Simon J. Evenett, 2016. "Knife edge? Switzerland as a base for multinational companies as relations worsen with the European Union," Aussenwirtschaft, University of St. Gallen, School of Economics and Political Science, Swiss Institute for International Economics and Applied Economics Research, vol. 67(01), pages 71-90, February.
    • Handle: RePEc:usg:auswrt:2016:67:01:71-90
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    File URL: http://ux-tauri.unisg.ch/RePEc/usg/auswrt/AW_67-01__05_Evenett.pdf
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    Citations

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    Cited by:

    1. Reto Foellmi, 2016. "Comment on "Switzerland's gains from trade with Europe" by Christian Hepenstrick:," Aussenwirtschaft, University of St. Gallen, School of Economics and Political Science, Swiss Institute for International Economics and Applied Economics Research, vol. 67(03), pages 43-45, December.

    More about this item

    Keywords

    Switzerland; European Union; Multinational corporations; Foreign direct; Investment; Non-tariff barriers; Trade costs;
    All these keywords.

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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