Zurich cantonal government says Swiss membership of the European Union would have a positive impact on health, education, research and internal security.
But the economy would clearly benefit from maintaining the current approach through bilateral treaties between Switzerland and Brussels.
Zurich, one of the country's 26 cantons, is the economic hub of Switzerland and home to about one sixth of the population. It also claims to be a pillar of the country's agriculture sector.
The report, published on Thursday, said if Switzerland were an EU member it would be able to help shape European-wide developments on asylum, immigration and health as well as research and education.
However, the current policy of bilateral agreements with the EU would be an advantage for the financial sector and helped fend off pressure by Brussels to streamline the country's tax policy, according to the reports.
The bilateral approach also had a positive impact on social security, zoning, environmental policy, traffic and labour.
The authors said the report was Zurich's contribution to a wide-ranging debate on European policy, listing advantages and drawbacks of the different policy approaches, without taking a stance.
The document, which was compiled in 2004, is one of several studies to be published by other cantons and organisations on the issue.
Publication was delayed in the run-up to nationwide ballots last year about several controversial bilateral treaties with Brussels.
The federal government is due to publish its policy paper on Europe in June.
Switzerland has concluded a total of 16 bilateral accords with the EU - notably on trade, labour, transport, agriculture, tax, customs and asylum - following voters' rejection in 1992 of the European Economic Area Treaty.
A request for membership talks, which was submitted to Brussels in the same year, has been frozen ever since but the government has refused to withdraw it, despite pressure mainly from the rightwing Swiss People's Party.
Over the past ten years, Swiss voters have rejected a proposal to launch membership talks with the EU.
They have also thrown out calls for a nationwide vote on whether the government is allowed to open membership talks.
swissinfo with agencies
Switzerland has concluded 16 bilateral treaties with the EU following voters' rejection in 1992 of membership in the European Economic Area Treaty.
The government asked for membership talks in 1992, but the request has been put on hold since.
Swiss voters endorsed the policy of bilateral accords in several nationwide ballots since 2000.
The government is due to publish its white paper on European policy by July.
The country's business community has come out in favour of maintaining the bilateral approach, while the country's 26 cantons are due to publish their position before the end of this year.
Of the four main political parties in Switzerland, only the Social Democrats are in favour of EU membership, while groups to the right have been strongly opposed to closer ties with Brussels.
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