had a stabilising effect and helped avoid an even greater drop in swiss goods exports. ladies and gentlemen, in addition to the diversification towards asia, the longer term structural change in the composition of swiss goods exports thus also proved beneficial during the crisis. 2. 3 quality matters the third aspect i wish to address today is the quality of swiss goods exports. as a rule, the “ made in switzerland ” hallmark is used to denote excellence. but do swiss exports actually deliver high quality? quality is not easily measured. given the lack of alternatives, economists generally express the quality of goods in terms of “ unit values ”. literally speaking, this represents the average price per unit of weight, for instance per kilogram. i, too, will use this unit of measure. however, this unit makes more sense if groups of similar products are examined. in the aggregate figure for swiss goods exports, the price per kilo of rolex can be found alongside the price per kilo of tamiflu or per kilo of a regional train. this makes an international comparison problematic. thus, in addition to using unit values for aggregate exports, i will also include unit values for individual sectors. unsurprisingly, there are major differences between the sectoral unit values for switzerland. last year, watch exports had the highest unit value, at around eur 7, 000 per kilo. this was followed – by quite a considerable margin – by pharmaceuticals, at roughly eur 320 per kilo. exports of precision instruments were also somewhat above - average, at around eur 150 per kilo. 15 where does switzerland stand by international standards? compared with many other european countries, the unit value of swiss goods exports is very high. the only other country with a similarly high unit value for its exports is ireland. 16 when looking across sectors, it is evident that a considerable part of switzerland ’ s quality advantage can be attributed to watch exports. averaged over the last ten years, their unit value was almost 40 times higher than in the eu ( cf. chart 3 ). but there are also several other sectors where switzerland has a higher unit value than the eu, for example precision instruments. this is a sector where switzerland also has a comparative advantage ; partly due to historical factors, but also to continuous innovation. but even for exports of processed metal goods and machinery does switzerland have higher export unit values than, for instance, the eu. looking at developments over the last 20 years, it is primarily

the prices of watch exports that have risen considerably. ireland also exports a lot of chemical and pharmaceutical products. besides, the unit values of its exports of electronic products are also very high. chart 3 source : eurostat. overall, the results from a unit value analysis support the assessment that switzerland is specialised in the production of high quality products. this is in line with previous studies. these show that swiss export products largely compete on quality, rather than on price. 17 given the level of know - how in switzerland, this ought to be the case in the future as well, assuming that swiss products can continue to fulfil the ever - growing demands on quality. to what extent could this have had a positive influence on the way in which exports developed in the most recent crisis? for the short term, at least, it can be assumed that higher quality products are more difficult to substitute than relatively homogenous goods. this applies not only to pharmaceuticals, but also to highly specialised products such as precision instruments. and this was indeed the case during the most recent crisis – swiss exports of precision instruments receded only slightly, and have since risen to such an extent that they now already exceed their pre - crisis level. even the watchmaking industry – which, as a producer of luxury goods, suffered a massive drop in demand during the crisis – has seen a strong recovery in the last year thanks to the global turnaround. accordingly, exports of watches are now only slightly below their pre - crisis level. 3. conclusion in closing, let me recap. the geographical orientation, the focus on products less sensitive to the business cycle, and the specialisation in top quality goods are the three factors likely to have mitigated the negative impact of the most recent financial and economic crisis on swiss exports. on the whole, the swiss export industry seems to be well positioned to compete successfully on a global level. such a conclusion is reassuring, because major challenges still lie ahead. for example, credit suisse ( 2006 ) : quality – the export industry ’ s only chance? for instance, switzerland ’ s increased focus on the asian market also has its risks. a significant slowdown in asia ’ s economic recovery – particularly in china – would undoubtedly impair swiss export prospects. needless to say, however, a renewed downturn in europe – still switzerland ’ s most important trading partner by far – would impact swiss exports to a far greater extent. furthermore, current exchange rate developments pose a major challenge for swiss