Leisure Tourism in Switzerland Project for Microeconomics - Term Paper Example

? Leisure Tourism in Switzerland Project for Microeconomics of Competitiveness Contents Contents 2 Introduction 3 An overview to Switzerland 3Economic Performance 4 References 10 Introduction Tourism happens to be one of the most important contributors to the Swiss economy. The tourism industry accounted for almost 2.9% of the total GDP of the country in 2011. Both domestic and international tourism are important factors. Tourism related products are mainly responsible for almost 60 percent of the total value added from tourism. The high degree of value added by the tourism industry in the country can be explained by the fact that Switzerland has specialized in this field for over a century now. The country has the advantage of competitive tourism centers. The tourism policy of the country is an important aspect of the overall economic policy of the country. The demand of the tourism actually benefits various economic sectors as well as companies. The promotion of the tourism industry makes substantial contribution to the objectives of the economic policy of the nation, especially in the area of employment. Tourists are mainly drawn to the Alpine climate and the landscapes of the country. Most of the tourists come in for Skiing and mountaineering. All these factors make Tourism an extremely part of the overall economy of the nation. An overview to Switzerland The Swiss Confederation was established in 1291 mainly as a self-protective alliance between three cantons. In the following years various other localities joined. The Swiss Confederation was able to gain independence in 1499 from the Holy Roman Empire. The Constitution of 1874 replaced the confederation with a more centralized federal government. The neutrality and sovereignty have long been respected by the major European powers (Burgemeister, 2003:3). The country was not involved in either of the two world wars. The economic and political integration of Europe over the last half century along with the role of the county in various international organizations and the United Nations has made the ties of the country stronger with the other European neighbors. However, here it needs to be mentioned that the country did not became a member of the United Nations till 2002. The country remains active in the United Nations and other international organizations and yet manages to retain strong commitments towards being a neutral entity. Here are some important facts about the country (Cowan, 2005: 7). Gross Domestic Product $659.3 billion (2011) Gross Domestic Product Growth Rate 1.10% (2011) Population 7.912 million (2011) Life Expectance 82.70 years (2011) Median 41.3 Land Area 40,000.0 Unemployment Rate 3.10% Economic Performance The per capita GDP growth in Switzerland was 1.6 in 2011, according to a report published by the World Bank in 2012. The annual percentage of the per capita GDP growth rate has been calculated based on the stable local currency (Frank, 1964:21). Figure 1. Per capita GDP growth (annual %) in Switzerland (Source: World Bank) The real gross domestic product (GDP) in Switzerland has increased by 1.10 % in the first quarter of 2013, as compared to the same quarter of the last year. The annual real GDP growth rate in the country has been reported by the State Secretariat for Economic Affairs. From 1981 to 2013, the real GDP growth rate has been averaged at 1.66 percent. An all-time record high of 7.30 percent was reached in March of 1990. Here it should also be mentioned that a record all-time low of -3.70 was reached in June 2009. In the country, the annual growth rate in GDP shows the change in the value of the services and goods produced by the economy of the nation during the period of a year (Henry, 2008:51). Figure 2: Real GDP Annual Growth Rate of Switzerland (Source: State Secretariat for Economic Affairs) Although labor productivity continues to be the preferred choice, various economists also tend to think in terms of the total factor productivity, or TFP. The total factor productivity of the country has gone down in the last year or so. Since the major recession, there was a downward and upward trend in 2009. The TFP percentage has dipped to -0.42% mainly due to the global economic downturn since. Figure 3. Switzerland Annual Growth in Total Factor Productivity (Source: Conference Board) According to a report published by the International Monetary Fund, the gross fixed investment of the country in 2012 was 20.6%. In 2010, it was 18.51% (Moschandreas, 2000:45). Figure 4. Gross Fixed Investment Growth (Source: International Monetary Fund) The total product exports in the country are $215,688,240,237. In Switzerland, the majority of exported goods are shipped to a number of countries from where the imported goods come in. Most of the import trade partners of the country are the industrialized countries such as Italy, Germany, France, Netherlands, USA, Great Brittan, Japan, etc (Porter, 1998:23). Figure 5. Switzerland Exports by Product Section in US Dollars - Yearly (Source: State Secretariat for Economic Affairs) The most important trade products are chemicals, machines, vehicles, metals, textile, energy, leather, rubber, plastic, stone soil, watches, jewelry, and precision tools. Table 1Most Important Trade Products, Source: State Secretariat for Economic Affairs Number Goods Export (metric ton) 1 Chemicals 4486 2 Machines 31693 3 Watches and Jewelry 22602 4 Agriculture and Fishery 4219 5 Vehicles 3742 6 Textile and Clothing 3726 7 Leather, Rubber and Plastic 3647 8 Paper 3275 9 Metals 974 10 Stone and Soil 780 11 Energy 363 A part from this the expenditure of the foreign guests in the country has the same effect on the balance of payment of the nation as the export of goods and services. Tourism industry contributes 6% to the country’s GDP. This is the very reason due to which sometimes tourism is referred to as an invisible export. Figure 5. Swiss Federal Statistical Office References Burgemeister, S. (2003) Market Analysis. DE: GRIN Verlag. Cowan, A. (2005) Risk Analysis and Evaluation. UK: Global Professional Publishing. Frank, N. (1964) Market Analysis: a Handbook of Current Data Sources. US: Scarecrow Press. Henry, A. (2008) Understanding Strategic Management. UK: Oxford University Press. Moschandreas, M. (2000) Business Economics. US: Cengage Learning. Porter, M. (1998) On Competition. UK: Harvard Business Press. Read More