The global economic downturn has pushed Switzerland higher in the world competitiveness rankings, but the country lacks competent managers.
Switzerland jumped three places to position seven in the IMD's World Competitiveness Yearbook, edging ahead of Hong Kong (ninth) and Ireland (tenth), which were ahead of Switzerland last year. The United States remains in top spot.
The study's director, Professor Stéphane Garelli, said Switzerland's improved ranking had little to do with its own performance and was instead the result of the downturn affecting last year's high-growth economies.
In 2001, he said, "43 out of 49 countries in the study had a GDP growth rate equal or superior to three per cent. In 2002, there are only 14... Singapore drops from second to fifth place... The same trend affects Hong Kong and Ireland which also lose three ranks."
Management takes a tumble
The country's economic performance may have been stable, but the study found that the quality of company boards and top management left a lot to be desired.
In a year which saw the collapse of the national airline, Swissair, a debt crisis at the electrical engineering group ABB, and investor jitters over the performance of several company bosses, the credibility of company boards plummeted from position 17 to 31, and the credibility of senior managers from 19 to 25 place.
The study pointed out that the shortage of competent senior managers and skilled labour was balanced by the fact that the country did well in recruiting skilled workers and managers from abroad.
Overall Switzerland emerged as an excellent place to do business. Its economic fundamentals are sound - low unemployment, inflation and interest rates - and it has a high degree of social cohesion coupled with excellent labour relations.
The study found that although public opinion is hostile to globalisation, the phenomenon is having a positive effect on the economy, which continues to enjoy a healthy current account surplus.
The country scored low for flexibility and adaptability - 40th out of 49 countries - and was found to be hostile to outsiders, with high levels of protectionism (31st place), restrictive immigration policies (32nd), and limited access to public contracts for foreign firms (36th).
The government scored well for efficiency (fifth) and transparency (third). However, its ability to "adapt quickly to new economic realities" was found to be lacking (29th place).
More effort is also needed to bridge the gender gap, with women still earning significantly less than men (ranking 23rd). Compared with other countries women were found to be severely under-represented in senior political and management positions (ranking 35th).
The study concluded by noting that Switzerland ranks fourth for "quality of life" - evidence, says Garelli, that the Swiss know how to "enjoy the benefits of competitiveness".