Jean-Pierre Roth: Switzerland as an industrial location and National Bank
policy
Summary of a speech by Mr Jean-Pierre Roth, Chairman of the Governing Board of the Swiss
National Bank, at the Europa Forum Lucerne, Lucerne, 27 October 2003.
The complete speech can be found in German on the Swiss National Bank's website (www.snb.ch).
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In a high-wage country such as Switzerland enterprises can only maintain their position in the face of
international competition by a process of ongoing innovation. The resulting structural change in the
direction of highly technological and increasingly productive economic sectors is also a prerequisite for
strong economic growth. In an international comparison, however, Switzerland's growth is poor. This
weak perfomance in terms of growth highlights the need for action in economic policy.
Monetary policy cannot, however, fulfil this role. The primary task of monetary policy is to ensure price
stability. Price stability is an important locational advantage that Switzerland has to offer. Moreover,
monetary policy can also contribute to stabilising the economy and warding off undesirable exchange
rate shocks. It is, however, not in a position to bring about a sustained improvement in economic
growth. The result of such an attempt would merely be economic overheating with the threat of a
subsequent slide of the economy into recession.
Lasting effects on economic growth may, by contrast, emanate from education policy, research policy,
policy on foreigners and fiscal policy. Weak growth in Switzerland, however, may be explained mainly
by the conspicuous productivity gap between the innovative export sector and the domestic sector set
in its traditional structures. The reason for this lethargy of the domestic sector is a dense network of
regulations which limit competition and obstruct technical progress. The result is an excessively high
domestic price level from which not only consumers but also exporters suffer. Growth-promoting
measures must therefore aim primarily at wedging impediments to competition in the domestic sector.