Austria and Switzerland – Experiences with and without EU Membership

Fritz Breuss

Austrian Economic Quarterly, 2006, vol. 11, issue 1, 13-39

Abstract: Austria and Switzerland have pursued different strategies towards European integration: Austria, having acceded to the EU in 1995, became a member also of Economic and Monetary Union in 1999. Switzerland, on the other hand, after the rejection of the EEA Agreement in a referendum in 1992, opted for a strategy of bilateral approach to the EU. Today, Switzerland is linked to the EU in key areas of economic integration via two bilateral agreements. Austria, benefiting from its position of full economic integration, can exploit the potential integration effects of the Internal Market and EMU, but, being a full-fledged EU and euro area member, is subject to the economic policy constraints implied by such membership. Moreover, rich EU countries tend to be net contributors to the EU budget. Altogether, after ten years of EU membership, Austria comes out on the positive side: its GDP appears to have grown by up to ½ percentage point p.a. more rapidly on average than might have been the case without EU integration. Switzerland, through its lagged and partial participation in the EU Internal Market, gained only a few advantages from this type of approach to the EU. Nevertheless, its bilateral strategy allows it to pick out, through sectoral agreements, only those integration aspects that are in its national interest. In this way, Switzerland evades the disadvantage of being a net contributor to the EU budget and is able to continue pursuing its own economic policy. Still, on balance Switzerland appears to have suffered welfare losses over the last decade.

Date: 2006
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