AI-translated. Some sections may contain inaccuracies.
At a glance
- The more export-oriented an industry is, the greater its productivity gains.
- International markets foster innovation, efficiency, and the spread of new technologies.
- In light of an aging population, productivity growth is becoming increasingly important for prosperity and growth.
Switzerland is one of the most open economies in the world. International markets are not only important sales channels for Swiss companies, but also drivers of innovation and productivity. In light of an aging population, this is becoming even more important: When a smaller workforce must support a growing elderly population, productivity gains become a key prerequisite for growth and prosperity.
Export-oriented industries achieve higher productivity gains
An analysis of 40 industries reveals a clear correlation between export orientation and the trend in nominal labor productivity. The industries were divided into four equally sized groups based on the share of exports in final demand. The analysis shows that industries more heavily oriented toward foreign demand achieved significantly higher productivity gains between 2014 and 2024.
International Markets Promote Innovation and Efficiency
Companies that want to succeed in international markets face intense competition. They must produce efficiently, develop innovative products, and quickly adopt new technologies. At the same time, international markets allow research and investment costs to be spread across larger production volumes. The analysis suggests that these factors are also reflected in productivity trends. Export-oriented industries recorded significantly higher productivity gains than industries that produce primarily for the domestic market.
The pharmaceutical industry, in particular, contributes significantly to Switzerland's productivity growth. However, the observed correlation extends beyond this sector: even excluding the pharmaceutical industry, export-oriented sectors are recording significantly higher growth rates than domestic-oriented sectors.
Open markets remain a competitive advantage
The results underscore the importance of international connectivity for the Swiss economy. International markets are not only sales channels but also an environment that fosters innovation and promotes efficiency gains. This presents a clear mandate for economic policy. Access to international markets must be secured and further developed. This includes stable relationships with key trading partners, an effective network of free trade agreements, and framework conditions that promote investment, innovation, and entrepreneurship.
At the same time, the analysis also highlights the potential within the domestic market. If competition, innovation, and efficiency are key factors in productivity gains, these incentives should not be limited to the international arena. Within Switzerland as well, competition-friendly framework conditions, reduced administrative burdens, and an innovation-friendly environment can help to broaden the foundation for productivity growth.
In light of demographic trends, productivity is becoming a key factor in prosperity. Switzerland should therefore strengthen its international connections while also fostering greater competition, innovation, and entrepreneurial freedom within its domestic market.
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