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Legatum Prosperity Index 2016
Switzerland
Ranked 4th of 149 on the 2016 Legatum Prosperity Index™
OVERVIEW
Switzerland is one of the world’s wealthiest and most prosperous nations, with
rising Economic Quality pushing the country into the global top five for
prosperity for the past five years.
Switzerland has long been a global leader in the delivery of prosperity: it has a stable, hightech economy, strong democratic institutions with low corruption, and provides its citizens
with quality education and healthcare. It has one of the highest GDPs per capita in the world
and has the highest ‘prosperity’ surplus (it delivers more prosperity than expected given its
wealth) of the world’s ten wealthiest countries. In the 2016 Prosperity Index, Switzerland
ranks 4th, maintaining this position since last year and has consistently ranked in the global
top 10 for prosperity over the past decade. It considerably outperforms OECD averages
across the sub-indices, particularly in Governance. Notably, it also ranks 1st in Education,
3rd in Health, and 4th in Economic Quality.
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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.
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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.
Economic Quality (score) in Switzerland compared to the Western European average.
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,
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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.
Voter Turnout (%) and Confidence in national government (% yes) in Switzerland and the OECD.
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
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Freedom has increased in the last ten years, Switzerland has been overtaken
by Portugal and Finland because both legalized 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 organization and 53% say they have donated
to charity within the last month.
Ways to make a change
Click on the Tweets to help make a change in your nation.
1. Switzerland: bottom 30 globally for voter turnout, but 6th in Governance?
2. Can Switzerland’s bottom-up governance be a model for fledgling democracies
elsewhere?
3. World-class education is crucial to Switzerland’s economic success. Invest in skills for
economic strength!
Visit Switzerland’s country profile on www.prosperity.com.
Legatum Prosperity Index 2016
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