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Exchange Rate and Regional Divergences: The Swiss Case

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  • Jose Corpataux
  • Olivier Crevoisier
  • Alain Thierstein

Abstract

From 1975 to 1995, the Swiss franc appreciated in a near constant manner compared with the currencies of all of the country's commercial partners. This paper will seek to demonstrate that the various regions in Switzerland evolve differently when faced with a continuously appreciating currency. The paper is not in the nature of an econometric study and will not seek to quantify the gains and losses of each region, but it will view their structural evolution via the effect of the exchange rates. Faced with the appreciation of the Swiss franc and based on their productive specialities, some regions suffer badly from this, whilst others cope with it and even thrive on it. It is thus possible to openly question the consequences of the Swiss National Bank's monetary policy: has domestic industry been sacrificed in favour of financial activities? Is the continuous rise of the Swiss franc increasing regional disparities in Switzerland? The paper first discusses the theories that establish a link between the exchange rate and the evolution of regional production systems. All these theories draw conclusions that can vary radically. Furthermore, they are usually based on the assumption of homogenous national territories. The second part contains a description of the methodology applied, which is based on the concept of regional production systems (RPSs). The impact of the exchange rate on RPSs is explained by means of three criteria: sectorial specialization and basic source of income within RPSs; the presence or absence of large firms; and the innovative capacity of the RPSs. The third part of the paper illustrates five examples of RPSs, each of which has evolved in a radically different way over the relevant period. Lastly,a link is established between the regional divergences and the evolution of the exchange rate in the whole of Switzerland from 1975 to 1995. The conclusion draws a parallel between the evolution in Switzerland and the tensions that could arise between the regions and the nations constituting the Euro zone. Entre 1975 et 1995, le franc suisse s'est apprecie de maniere presque continue face aux monnaies de l'ensemble des partenaires commerciaux du pays. Cet article cherchera a mettre en evidence l'evolution differenciee que connaissent les regions de Suisse face a une monnaie en appreciation continue. Cet article ne releve pas d'une etude econometrique et ne cherche pas a quantifier les gains ou les pertes de chaque region, mais saisit en revanche leur evolution structurelle a travers l'effet du taux de change. Face a l'appreciation du franc suisse et en fonction de leurs specialisations productives, certaines regions souffrent considerablement, alors que d'autres s'en accommodent, voire en beneficient clairement. Cette article demontre ainsi que la politique monetaire n'est pas neutre d'un point de vue sectoriel et regional. On peut, des lors, ouvertement s'interroger sur les consequences de la politique monetaire menee par la Banque Nationale Suisse: l'industrie nationale n'aurait-elle pas ete sacrifiee au profit des activites financieres? L'appreciation continue du franc n'est-elle pas en train de transformer la Suisse en machine a fabriquer de la divergence territoriale? Cet article examine tout d'abord les theories qui mettent en relation le taux de change et l'evolution des systemes de production. Ces differentes theories aboutissent a des conclusions qui peuvent etre radicalement differentes. De plus, elles supposent generalement des espaces nationaux homogenes. Ensuite, dans la seconde partie, nous preciserons la methodologie utilisee pour mettre en evidence des systemes de production regionaux (SPR) en Suisse. L'impact du taux de change sur les SPR sera examine a travers trois criteres: la specialisation sectorielle et la provenance du revenu de base du SPR, la presence ou l'absence de grandes entreprises et enfin la capacite d'innovation du SPR. La troisieme partie presente cinq exemples de SPR qui ont connu des evolutions radicalement differentes durant la periode consideree. Enfin, on met en relation les divergences regionales et l'evolution du taux de change au niveau de la Suisse entre 1975 et 1995. La conclusion tire un parallele entre l'evolution suisse et de possibles tensions futures entre les regions et les nations qui constituent la zone Euro. Zwischen 1975 und 1995 hat sich der Aussenwert des Schweizer Frankens, verglichen mit den Wahrungen der Schweizer Handelspartner, beinahe konstant erhoht. Dieser Beitrag versucht zu zeigen, dass sich die Regionen der Schweiz angesichts der sich kontinuierlich aufwertenden Schweizer Wahrung unterschiedlich entwickeln. Der Artikel zeigt in erster Linie, wie die strukturelle Regionalentwicklung beeinflusst wird von Wechselkursen. Es geht dabei aber nicht um eine okonometrisch ausgelegte Quantifizierung von Gewinnen und Verlusten der Regionen. Aufgrund der spezifischen Wirtschaftsstruktur spuren einige Regionen die Aufwertung des Frankens sehr deutlich, wahrend andere sich mit diesem Druck gut arrangieren und wiederum dritte gar davon profitieren konnen. Geht man von dieser Feststellung aus, so muss die Politik der Schweizer Nationalbank auf den Prufstand gestellt werden: wurde im Nachhinein betrachtet die einheimische Industrie zugunsten des Finanzsektors geopfert? Bewirkt die standige Aufwertung des Schweizer Frankens nicht eine Vergrosserung der regionalen Disparitaten? Der Beitrag prasentiert zuerst Theorien, die eine Verbindung herstellen konnen zwischen dem Wechselkurs und der Entwicklung von regionalen Produktionssystemen. Diese Theorien kommen jedoch zu sehr stark auseinander liegenden Folgerungen. Zudem gehen diese Uberlegungen in der Regel von einem homogenen nationalen Territorium aus. Im zweiten Teil des Artikels wird die angewandte Analysemethode erlautert, die auf dem Konzept der regionalen Produktionssysteme (RPS) aufbaut. Die Auswirkungen des Wechselkurses auf die RPS werden durch drei Kriterien erklart: sektorale Spezialisierung und das Exportbasis-Einkommen von RPS; das Vorhandensein oder Fehlen von Grossunternehmen; die Innovationsfahigkeit von RPS. Der dritte Teil des Beitrages illustriert fur die Untersuchungsperiode die sehr unterschiedlichen Entwicklungspfade von funf RPS. Schliesslich wird fur die Schweiz als ganzes und die Periode von 1975 bis 1995 ein Zusammenhang zwischen der Entwicklung des Wechselkurses einerseits und von regionalen Disparitaten anderseits hergestellt. Die Schlussfolgerung zieht eine Parallele zwischen dem 'realen Fallbeispiel' Schweiz und den moglichen Spannungen, die sich in Zukunft zwischen Regionen und Mitgliedstaaten der Europaischen Wahrungsunion ergeben konnen.

Suggested Citation

  • Jose Corpataux & Olivier Crevoisier & Alain Thierstein, 2002. "Exchange Rate and Regional Divergences: The Swiss Case," Regional Studies, Taylor & Francis Journals, vol. 36(6), pages 611-626.
  • Handle: RePEc:taf:regstd:v:36:y:2002:i:6:p:611-626
    DOI: 10.1080/00343400220146768
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    References listed on IDEAS

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    1. Ron Martin, 2001. "EMU versus the regions? Regional convergence and divergence in Euroland," Journal of Economic Geography, Oxford University Press, vol. 1(1), pages 51-80, January.
    2. Michel Aglietta & Camille Baulant, 1994. "Contrainte extérieure et compétitivité dans la transition vers l'union économique et monétaire," Revue de l'OFCE, Programme National Persée, vol. 48(1), pages 7-54.
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    Cited by:

    1. Olivier Crevoisier & Frédéric Quiquerez, 2004. "Integration of control relations in the problematic of competition between regions," ERSA conference papers ersa04p419, European Regional Science Association.
    2. José Corpataux & Olivier Crevoisier, 2005. "Increased Capital Mobility/Liquidity and its Repercussions at Regional Level," GRET Publications and Working Papers 10-05, GRET Group of Research in Territorial Economy, University of Neuchâtel.
    3. Christof Abegg & Alain Thierstein, 2003. "The liberalization of public services and their impact of on the competitiveness of firms: a case study in the Alpine regions of Switzerland," ERSA conference papers ersa03p145, European Regional Science Association.

    More about this item

    Keywords

    Exchange Rate; Optimal Monetary Zone; Regional Production Systems; Financial Centres; Euroland; Industrial Regions; Tourist Regions;

    JEL classification:

    • G3 - Financial Economics - - Corporate Finance and Governance
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • G0 - Financial Economics - - General

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