There was an interesting piece on Switzerland (and Uruguay) in an old McWilliams article from 2006:
"Economic history is replete with examples of this. A country we are rarely compared to is Uruguay. However, if there is one place that Ireland in the early 21st century resembles it is Uruguay of the early 20th century. It maybe hard to believe now, but Uruguay was the world’s fastest growing country for almost twenty years. It had the amongst the world’s most comprehensive social welfare system, brilliant infrastructure and like Ireland today, a rapidly rising population driven by immigration. So advanced was this small Latin American country, that it was termed the “Switzerland of the Americas”. Uruguay was in truth nothing of the sort. Like Ireland today, it was a supply region. In its case, it was a highly efficient part of the global trade in agriculture. Uruguay was one of the world’s most competitive suppliers of meat, wool and leather. Its farms were amongst the most productive in the world and with the huge revenues it gained from this pre-eminence, the government invested in a state of the art welfare system, great schools and a European-style transport infrastructure. Montevideo’s boulevards were home to the finest fashions of New York and Paris. The virtuous cycle seemed to have taken hold. Because it was so brilliant at agriculture, Uruguay did not see fit to promote other industries or innovations. Montevideo was content to process agricultural products, add value and export them.
In the 1930s things began to change. Agricultural prices fell worldwide. Uruguay suffered its first recession. Then after the Second World War European countries - having flirted with famine in 1945-46 - began to crank up agricultural production. Australia and New Zealand emerged as significant players in the market and Uruguay’s period in the sun came to a crashing end. Since then, Uruguay’s story has been one economic disaster after another.
Arguably, had the government and the people realized that they were experiencing a one-off “golden age” they might indeed have innovated in other industries to become the true Switzerland of the Americas. But they did not. Money ran through Uruguay like a dose of salts and sixty years after its heyday it has not yet responded to the challenge thrown down in the late 1940s. In the dry language of economics, Uruguay suffered from what is termed “a terms of trade shift”. The international value of what they exported fell at the same time as the prices of their imports rose. And, they had all their eggs in one basket.
Switzerland, on the other hand, has thrived. Its wealth was based not on being a link in the global supply change but rather on years and years of strong domestic innovation, based in its small cities. Its industrial base has been diversified for years and it can ride out vagaries in the world economy."
The full article is here:
[broken link removed]