Direct Foreign Investment In Switzerland: Legal Issues
Switzerland, a fundamentally prosperous and stable modern
economy with a per capita GDP roughly 10% above that of the big West European economies, is experiencing short term difficulties. After recovering slowly in 1994 95 from recession, the Swiss economy remains weak, mainly because of the strong Swiss franc and weak growth in Swiss export market, especially in other European countries. Over the near term, growth may average barely 1%, with more than one half of this increase resulting from growth in inventories. Weak domestic consumer demand is the principal culprit; stagnation in real disposable income is combining with a reluctance to reduce saving rates in the face of an uncertain employment outlook (Switzerland, 1996b).
Switzerland's leading sectors, including financial services, biotechnology, pharmaceuticals, and special purpose machines, will therefore be more reliant on export markets at the same time they are being squeezed by the strong franc. Consequently, growth in machinery and equipment investment, for example, is expected to taper off. On the other side, import growth has been fueled by the strong franc; there are growing indications that Swiss manufacturers are substituting imported inputs for domestic ones (Switzerland, 1996b).
Considering Switzerland's status as a rock solid financial center, investment in Switzerland is still an excellent opportunity. Switzerland's market capitalization stands at $150.1 trillion, seventh highest in the world. Switzerland's foreign reserves, according to International Monetary Fund standards, stood at $35.1 billion in February of 1997 (Financial indicators, 1997, 109).
The differences between direct investment in Swiss manufacturing and investment in manufacturing for export to Switzerland are paramount. Swiss barriers to direct import (American export) include:
1. Agricultural Products. Until ...