The impact of exchange rate on regional development: The example of western Switzerland

A currency space would be constitute in a ideal way if the integrated economic regions would react similarly on external shocks. In fact, Switzerland, as an economic space, is far from being homogenous. Since the end of Bretton-Woods, Switzerland is confronted with a durably revaluation of its currency on the exchange markets. The export industries and the tourism seem to be challenged by the strong currency. However, the financial industry is likely to profit by the development of the exchange rates. The "working place" and the "financial place" of Switzerland compete more and more concerning the optimal economic conditions. This situation must be considered as fairly explosive for regional development in Switzerland. We face an uneven spatial allocation of export orientated industries and presumed beneficiaries. And, there is also an unequal availability of resources on the organisational, sectorial and regional level - in order to react on the long-term revaluation of the Swiss currency. This paper presents the first results of a research project led on the Swiss case. We discuss the influence of the evolution of the exchange rate on the development of regions in Switzerland. It consists first in identifying regional production systems (RPS) in the country. A RPS is defined as a productive specialised area including a number of small and/or large firms. Across these RPS' sectorial specifities and their development logic, we try to understand the RPS' evolution against a durably strong currency. We expect different possible evolutions, i.e. the relocation of activities, the contraction of specific activities, the development of new industrial activities, etc. Through the notion of territorial anchoring, we develop the idea that particular activities are rooted more durably to their territory and maintain a more qualitative relation with it, preventing relocation. The analysis allows to constitute a typology of RPS' in Switzerland, regarding their exposure to the longrun currency development and their territorial anchoring.