Growth in Switzerland: is the picture really that gloomy?

This paper presents and discusses a number of variables closely related to real Gross Domestic Product (GDP) and applies them to a set of 23 countries to assess Switzerland's performance relative to that of other countrie s during the period 1970 – 2002. To what extent do these variables confirm Switzerland's poor economic performance, such as suggested by movements in real GDP? A partial anwer is provided in this simple, exploratory text, where the statistical and conceptual justification for choosing a variable rather than another is given priority over the investigation of the possible economic mechanisms explaining the pattern of the data presented. Results show that Switzerland's weak real GDP growth partly reflects statistical misspecifications. On the one hand, computing real GDP per unit of labour (i.e., per worker or per hour of work) barely changes the picture that emerges from movements in real GDP alone. On the other hand, the increase in purchasing power due to favourable movements in export and import prices, which is not taken into account by real GDP, reduces the growth gap between Switzerland, on one side, and the European Union and the United States, on the other. Moreover, the level of output produced by one unit of labour has been fairly high, on average over the last three decades, in Switzerland. Many countries, however, are catching up. Finally, Switzerland performs very well in the dollar value generated by one hour of work, that is, in the creation of the external purchasing power created by one unit of labour.