| „Resilience Over Efficiency: Adapting Supply Chains for a Multipolar World“ by Wolfgang Lehmacher. „Governments now view supply chains as extensions of national security. The U.S. CHIPS Act and Europe’s Chips Joint Undertaking reflect a drive for self-sufficiency in semiconductors, a sector long dominated by Taiwan and South Korea. Friedman’s „technological sovereignty“ concept aligns with these trends, as states seek greater control over AI, rare earth minerals, and clean energy infrastructure.“ ——————————————- In Europe, various efforts are underway to become more attractive for researchers from the United States who want to leave the US directly or indirectly because of the new president’s policies. It’s difficult to say whether such efforts will be successful on a broad scale. I do not expect a mass migration of researchers from the US. But if Europe becomes more attractive for research, that is to be welcomed regardless of developments in the United States. Here is a small selection of initiatives and reports on these developments: An initiative by Francesco Saraceno and Debora Di Gioacchino A guest article by leading German economists A more recent article in the New York Times ——————————————- In a number of advanced economies, few companies drive economic growth. This is actually well known, but still always interesting. Good overview in this article from McKinsey: „A small number of firms contribute the lion’s share of productivity growth. Fewer than 100 productivity „Standouts“ account for two-thirds of growth in our sample of 8,300 large firms in Germany, the United Kingdom, and the United States.“ We know this from Switzerland. The pharmaceutical industry and a few companies in this sector drive a significant part of Switzerland’s economic growth. We discussed this a few months ago in a productivity bite. The pharmaceutical industry is a constant topic. It is a source of innovation and progress. At the same time, there is ongoing discussion about, for example, its prices being too high. We will not enter into this discussion here. Without a doubt, it is important in any case to create incentives for more investments in research and development. Recently, an analysis in the Neue Zürcher Zeitung suggested that in the pharmaceutical industry, dividend payouts are increasing at a higher percentage rate than expenditures for research and development. Similar developments can be observed in part in other industries as well. It is important to understand the reasons for this and to improve incentives for more investments if necessary. „The NZZ has analyzed the dividend development of seven pharmaceutical companies that have been listed on the stock exchange since 2004. Novartis, Roche, Merck & Co., Bristol-Myers Squibb, Johnson & Johnson, Pfizer and AstraZeneca have tripled their dividend payouts in the past twenty years, from 18.4 to 54.7 billion US dollars in 2024. Thus, they increased dividend payouts by a higher percentage than expenditures for research and development.“ (own translation from German) ——————————————- The EU Commission has slightly lowered its forecasts for economic growth. Economic development in Germany and Austria continues to be particularly subdued. It expects stagnation for Germany in the current year and a slight contraction for Austria (-0.3 percent). The EU is expected to grow by 1.1 percent in 2025. ——————————————- The „Wake-up Call“ for Switzerland as a business location from economiesuisse, the Swiss Employers‘ Association, SwissMem and the Swiss Insurance Association One can have different opinions about the proposed measures. But a wake-up call is a good idea in any case. That is also one of the concerns of our network. ——————————————- In the first quarter of 2025, according to the first quick estimate from SECO, gross domestic product in Switzerland increased strongly by 0.7 percent. Whether such strong growth will continue is uncertain. Recently, various indicators for the Swiss economy have pointed to a possible weakening or even a contraction of the economy. We will probably have to wait another 1-2 months to better assess the economic situation. ——————————————- Looking back at the webinar „Skills of the Swiss Population: Where Do We Stand?“ with Sabine Scheiben and Annina Eymann from the State Secretariat for Education, Research and Innovation (SERI). Everyday skills (reading, everyday mathematics, and adaptive problem-solving) are important for a self-determined life as well as social and political participation. From an economic perspective, it is also important that the population has basic skills. This is central not least for productivity growth. It was very interesting to see the results of the OECD study PIAAC – Programme for the International Assessment of Adult Competencies. Switzerland, Germany, and Austria are generally somewhat above the average of OECD countries, but fall somewhat behind Scandinavian countries or the Netherlands. This should not be taken lightly if Switzerland (as well as Germany and Austria) wants to be strong not only in a few areas but with market leaders in small and medium-sized enterprises in a variety of economic sectors. ——————————————- Highly relevant! „Management and Firm Dynamism“ by Raffaella Sadun, Rachel J. Schuh, Jonathan S. Hartley, John Van Reenen, and Nicholas Bloom „We show better-managed firms are more dynamic in plant acquisitions, disposals,openings and closings in U.S. Census and international data. Better-managed firms also birth better-managed plants and improve the performance of the plants they acquire.“ ——————————————- Wow, super interesting! „The Rising Returns to R&D: Ideas Are not Getting Harder to Find“ by Yoshiki Ando, James Bessen, and Xiupeng Wang. „These findings suggest that R&D has become more effective at finding productivity-enhancing ideas but these ideas may also render rivals‘ technologies obsolete, making innovations more transient.“ ——————————————- Highly recommended! „The Social Returns to Public R&D“ by Andrew J. Fieldhouse and Karel Mertens „If the R&D increases authorized under the CHIPS and Science Act were fully appropriated, our modeling indicates a boost in U.S. productivity within a few years, reaching gains of 0.2–0.4% after seven years or more. At their peak, the direct productivity effects of the implied expansion in nondefense R&D alone would raise output by over $40 billion in a single year—exceeding total outlays fromthe CHIPS Act R&D provisions over a decade.“ ——————————————- Mobile working is everyday life. How does it affect a company’s productivity and people’s well-being? Exciting conference in October 2025 at Stanford, organized amongothers by Nicholas Bloom, one of the best-known researchers in this field. Remote Work Conference, Stanford University, October 22-24, 2025 „We will run a two-day conference on remote work, including hybrid arrangements that involve a mix of onsite and offsite work. The conference is open to papers on remote-work measurement, the drivers of remote work, managing remote and hybrid workforces, performance outcomes with remote work, and the implications of remote work for workers, organizations, and society.“ ——————————————- Productivity Bite: Research and Development Expenditures in the DACH Region Private and public expenditures for research and development (R&D) are central to technological and economic progress (see, among many other studies, Jones and Summers (2020): „A Calculation of the Social Returns to Innovation„). Private and public expenditures for R&D in Switzerland, Germany, and Austria (DACH region) are only slightly lower than in the United States. They are significantly higher than the OECD or EU average (Figure 1). The small difference in these expenditures between the DACH region and the United States indicates once again that in this region andin large parts of Europe, the commercialization of research results can still be significantly improved. It is interesting to look only at private R&D expenditures (Figure 2). There, the gap between the United States and the countries of the DACH region becomes somewhat more pronounced. In Switzerland, what stands out is that the pharmaceutical industry alone accounts for almost half of all private R&D expenditures. This also illustrates from this perspective the importance of the pharmaceutical industry for the Swiss economy. Strengths should be nurtured. At the same time, it seems crucial to me that we can maintain a certain economic breadth in Switzerland and continue to have other industries that generate productivity advances. Figure 1 (Source: Federal Statistical Office) |
Figure 2:
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