Switzerland: economy development after WW2.

During the war years, the number of workers and employees in the Swiss industry increased by 76 thousand people, or more than 20%. Towards the end of the war, when industrial production and production capacities in many Western European countries fell sharply (for example, in Austria in 1945 they amounted to only about 1/3 of the pre-war period), there were 1203 more enterprises in Switzerland than in 1938.The advantages that Switzerland secured for itself by not participating in the war played an important role in the development of its economy in the first post-war years. Growth in investment was a longer factor.From 1950 to 1959, the total investment in current prices more than doubled. Given the increase in domestic prices by 13% over this period, it increased by 80%, i.e., the annual growth was approximately 8%[12].The bulk of investments were made mainly in the construction of hydroelectric power plants of industrial enterprises, roads, and also dwellings. Switzerland in this indicator back in 1956, ahead of Germany and Austria, came in third place, after Norway and the Netherlands.Large investments in the Swiss economy are due to the following points:after the war but on foreign markets, demand for some of the most important products of the Swiss industry, in particular equipment, increased sharply;the weakening of competition has enabled the Swiss monopolies to expand the production apparatus. However, with the recovery and further development of the economy of Western European countries, the struggle for sales markets intensified and required continuous updating of production capacities, especially considering that production costs at Swiss enterprises due to high wage rates and the use of imported raw materials and fuel are much higher than in many of specified countries;improvement and rationalization of production, as well as further specialization in the manufacture of complex and expensive products, in the markets of which Switzerland had almost no competitors before, all this required huge investments;The stimulating factor was cheap loan capital. The official discount rate in Switzerland is the lowest in Europe;Post-war Switzerland is characterized by a sharp disproportion in the development of the most important areas of the economy - industry and agriculture, as well as their individual industries. If Switzerland is ahead of most Western European countries in terms of industrial output growth, then it is among the latter in terms of agricultural production growth;The total agricultural production in the country in 1957 increased compared to the pre-war by only 15%, while in Western Europe on average - by 32%. Switzerland was one of the few Western European countries in which the population growth, which amounted to 22% from 1938 to 1958, was greater than the increase in the production of agricultural products (until particularly fruitful 1958/1959)[14].The plight of the Swiss peasantry to the country's credit institutions also speaks of the plight of Swiss agriculture after the war. By 1959, it increased by 1.5 times compared with the pre-war period. The highest was the debt of small farms - with allotments up to 5 hectares.The main reason for the difficulties experienced by this sector of the economy is the strong fragmentation of production. In such a small country, having only 254 thousand hectares of arable land, there are over 206 thousand independent farms. This limits the possibilities of using modern agrotechnical achievements, leads to low labor productivity, high cost of production in the low profitability of most farms. Over 15% of the amateur population is engaged in agricultural production, and the share of agriculture in national income is only 5%. The war, disrupting the country's supply of imported feed, caused significant damage to the main sector of Swiss agriculture - animal husbandry. It took years before production in 1938 was again achieved in this industry.For agricultural products as a whole, the pre-war level was first surpassed only in 1951. The movement of domestic prices was unfavorable for agriculture in the post-war period. While prices for agricultural products almost did not rise, prices for industrial products purchased by peasants rose[13].Post-war recovery in the country enriched mainly Swiss monopolies.For almost all the war years, the net profit of banks (profit minus employee salaries, taxes and business expenses) was actually maintained at the pre-war level, and gross profit was even significantly higher than before the war (except for 1939 and 1940).After the war, due to the revitalization of lending activities and the wide participation of Swiss banks in all kinds of intermediary operations on the world market, the gross and net profits increased sharply: from 1945 to 1958, by 2.3 and 2.5 times, respectively. The net profit of the 5 largest banks increased over the same time by almost 4 times (from 22 million to 85 million francs), and the share of these banks in the total net profit of all banks increased from 23 to 40%.In the ten most important concerns of the main industries, the amount of net profit increased from 1945 to 1958 as a whole by 3.6 times, and among the concerns of the food and aluminum industries by 7 and 9 times. Gross profit, as a rule, was 3-4 times higher than net profit.A comparison of the dynamics of wages in profits shows that monopoly incomes grew at a particularly rapid pace. In particular, from 1950 to 1958, the nominal increase in wages amounted to 30%, while the increase in banks' net profit over the same period reached 70%, and that of the main industrial concerns almost 200%[12].Thus, the Second World War was a kind of milestone in the development of the Swiss national economy. Neutral Switzerland not only did not suffer from it, but ultimately even won. During the war years, a large number of new companies appeared in the country, production capacities expanded significantly, and its foreign exchange position improved.Speaking of historical premises, it is impossible to unambiguously determine which of them had the greatest influence on the formation of the Swiss model. Each of them made a specific contribution.3. Swiss Model StructureFunds from the budget of the confederation are allocated for the maintenance of the army, foreignpolicy, for social needs, and, above all, state pension payments, railways and roads. The budgets of the cantons provide for health care, education (all universities are cantonal), police, public transport. Community budgets account for social expenses, all kinds of infrastructure issues - construction, utilities, public transport, roads[15]. The basis of the financial system is the state budget. It plays a relatively modest role in Switzerland, which is largely due to the less development of state-monopoly capitalism in this country, especially state ownership.The structural feature of the Swiss state budget is that it consists of two parts: from the main, regular budget, which includes state revenues and expenses (the so-called financial calculation) and from the relatively small balance of the results of commercial activities of government enterprises (the so-called calculation of state property).The bulk of the funds goes to cantonal budgets. The total expenditure of all 26 cantons in 1995 is about 100 billion francs, and the expenditure budget of the confederation is 30-40 billion francs. The consolidated budget is compiled for statistical purposes.Compared with 1938, the total amount of budget revenues and expenditures increased in 1959 by almost 5 times. After the war, revenues, as a rule, exceeded expenses, due to the desire of the ruling circles to reduce huge government debt. Although Switzerland did not participate in the war, its increased military spending in those years was not covered by income, which, on the contrary, decreased due to a decrease in customs duties due to a reduction in the import of goods subject to high duties (cars, gasoline, etc.). By the end of the war, public debt grew almost 4 times against the pre-war, reaching 9 billion francs in 1946. In the post-war period, this debt began to decline, but in 1959 it was still equal to 6.2 billion francs, i.e., more than 1/5 of the national income.Recently, defense spending has decreased, while social spending has increased. It should be noted that there are no legislative acts on the budget. Unlike other countries, such as Germany, the Constitution does not specify how to budget.Since 1996, the procedure for financing health care has changed. It was always obligatory for employees to insure workers against an accident, regardless of where it happens at work or at home, but health insurance was considered optional. Starting next year, each citizen was required to have such insurance. In Switzerland, there are private and public insurance companies, which are closely monitored and controlled by the state.The amount of insurance premiums varies by canton, but everywhere there is a minimum rate. This is explained by the fact that in large cities - the best hospitals, more qualified doctors. When a resident of the canton, for example, cannot pay 150 francs, he pays the minimum rate, the rest is paid from the budget of the canton. Special care is taken to ensure that even the poorest people have health insurance.Both the employer and the employee pay the same amount to the pension fund. Men receive a pension from 65 years old, and women from 64 (in 1994 - from 62 years). The average life expectancy of men is 73 years, women - 76-78 years.In Switzerland, as in other countries, the so-called financial equalization is applied, i.e. strong cantons in the sense of taxation transfer part of the funds to the disposal of weak cantons. The same thing happens at the community level, financially strong communities support the weak.The current regulation on financial equalization provides that only a small part of the taxes received by the confederation remains with it. The rest goes to the cantons, with the poor getting more money than the rich. At the cantonal level, the same thing happens: part of the taxes received is redistributed and goes to the communities.At least half of the Confederation’s direct taxes, which comprise 20-30% of its revenues, are redistributed, although there are no rules in the financial equalization law. The specific size of the redistribution is discussed at a meeting of financial directors of the cantons, following which a joint decision is made. This takes into account the number of people in the canton, the amount of taxes per capita, other deductions from each resident, etc. Thus, distribution takes place on the basis of mutual agreement between representatives of the cantons.They were given the right to set part of the taxes themselves, but competition between them restrains them and makes it impossible to raise taxes. Lowest taxes in the canton of Zug. While in Zurich, individuals pay from 15 to 35% of taxes, depending on the amount of income, in Zug - 15% less. Therefore, it is more profitable to live in Zug and go to work in Zurich.The Swiss tax system reflects the three-stage political system of the confederation, 26 cantons and about 3 thousand municipalities. At all three levels, taxes are collected. Of course, the tax rights of the levels are regulated by the constitution. Fiscal powers are distributed in such a way that the confederation, cantons and municipal structures do not interfere with each other and do not overload taxpayers with unnecessary obligations.ConclusionsBased on the analysis, the following conclusions can be made:Switzerland is a highly developed industrial country with progressive science-intensive industries (chemical, engineering, food) export orientation, intensive agriculture, developed services, including tourism, a stable economy and political situation. The Swiss franc is one of the strongest world currencies.Despite its small size, Switzerland is very heterogeneous in terms of natural conditions, and in terms of economic development, and in socio-political terms. Many of these features have developed as a result of the fact that the cantons have traveled a different historical path.Using imported raw materials, materials, fuel, and Alp hydropower from its resources, Switzerland was able to develop its own industry. Transferring funds from more developed industries to new, promising, the country has achieved good results. For example, pharmaceuticals developed on the basis of chemical production, a powerful hydropower base contributed to the development of electrochemistry and electrometallurgy, etc.The historical experience of Switzerland shows that, on the whole, the development of federations follows the line of centralization. Apparently, this is the only possible way to preserve the viability of the federations in the face of ever-increasing competition within the international community. Switzerland has come a long way from the “union of the three” to the confederation, but this only tempered the Swiss people and revealed such qualities as endurance, patience, and hard work. These changes formed the basis for further economic success of the state.It is impossible to determine exactly what had the greatest impact on the economic development of Switzerland, but it is obvious that the Alpine republic owes its ability to refrain from participating in military-political alliances and their actions. Thanks to the policy of neutrality, for almost two centuries exhausting conflicts have bypassed it. The tolerant attitude of the Swiss towards religion has turned the country into a major center of immigration. The influx of qualified personnel contributed to the intensive development of the economy.List of referencesMeier M., Frech S., Gees Th., Kropf B. SchweizerischeAußenwirtschaftspolitik 1930–1948: Strukturen — Verhandlungen — Funktionen. Reihe: UnabhängigeExpertenkommissionSchweiz — ZweiterWeltkrieg — Commission Indépendanted’Experts Suisse — Seconde Guerre Mondiale. Band 10. 2002.Urner K., Der Deutsche Wirtschaftskrieg um die Schliessung der LückezwischenGenf und St.-Gingolph. In: Ders. «Die Schweiz muss nochGeschlucktwerden». S. 85-132. NzzLibro, 1997, Zürich.Foreign Relations of the United States (FRUS) 1945 Malta, Jalta, Protocol of German Reparation, p. 982 f. FRUS 1945. Band 2., p. 566-569 («Thompson Minutes»).Castelmur L. von., Schweizerisch-AlliierteFinanzbeziehungenim ÜbergangvomZweitenWeltkriegzumKalten Krieg. Die deutschenGuthaben in der SchweizzwischenZwangsliquidation und Freigabe (1945-1952). Zürich 1997. 2. Auflage. S. 25.U.S. and Allied Efforts To Recover and Restore Gold and Other Assets Stolen or Hidden by Germany During World War II. Coordinated by Stuart E. Einzenstat. 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