Canton Zurich, with a population of well over a million, is the biggest in the country and markets itself as the engine of Switzerland's economy.This content was published on January 6, 2002 - 10:58
Stephan Kux, who is in charge of the canton's economic development and works in the canton's economic ministry, has a three-fold task.
Firstly he has to market Zurich as a brand name able to attract the world's biggest companies, as well as taking care of existing companies located in the canton such as Sulzer and Adtranz.
Thirdly he has to provide work permits for foreign workers relocating to the canton.
For a comparatively small city and its hinterland, Kux says Zurich is well placed in the European investment league table.
"We are around sixth or seventh," he says. "Of course, London, Paris and Frankfurt are ahead of us, but we are in front of Barcelona and Milan, and Zurich in general is seen as a very attractive and cosmopolitan city."
But Zurich not only faces competition from abroad. Geneva and Lausanne are also home to the headquarters of many international companies, and Basel is an important centre for the pharmaceutical industry.
Small neighbouring cantons like Zug and Schwyz are also trying to attract investors with extremely low tax rates.
But Kux says financial incentives aren't always the deciding factor for foreign companies seeking a new location.
"There is, of course, a lot of discussion around the harmonisation of tax rates and a flat rate throughout the country would make things easier for investors," he argues.
"But we don't really feel in competition over tax rates. Quality of life issues are far more important and it makes a difference if you locate in Zug or Zurich: Zug doesn't have an opera house."
Switzerland's famed standard of living and the quality of life in Zurich are big assets which attract foreign investors to the canton, says Kux.
The proximity of Kloten airport is also an important selling point though Kux says it's a double-edged sword. "The airport is of great importance but there is a conflict with the quality of life. We certainly need the airport but a balance has to be struck between the number of flights and the disruption caused by noise and pollution."
Many analysts think this is a balance that will be hard to strike as the newly privatised airport expands to handle around 30 million passengers a year by 2010.
There are also advantages and disadvantages for Zurich because Switzerland is not a member of the European Union.
"At least the bilateral agreements with the EU will result in the freedom of movement and that's important as Switzerland is regarded as difficult in the granting of work permits." Kux says.
"We'll be inside the single market and outside the EU which means we won't be subject to tight regulation. But on the other hand, some investors, particularly those from Asia will prefer to locate in the EU."
Kux prefers to leave the bigger questions to the politicians, saying he has quite enough to do with short-term challenges.
"We need more work-permits because federal law imposes a tight limit on us. We have to make sure there are sufficient places at international schools and we need to ensure that there is enough real estate to house the companies coming here."
by Michael Hollingdale