Small European states in world markets revisited: the questioning of compensation policies in the light of the Swiss case

Fifteen years ago, Katzenstein convincingly emphasized the specific features of small European states to cope with their external environment: international liberalization, domestic compensation and flexible adjustment to fluctuations of international markets through democratic corporatist institutions. Thus, small countries should be expected to be less vulnerable to the current trend of economic globalization, as they have previously been exposed to international competition, at least in product markets. Like other small European countries, Switzerland also developed some kind of compensation policies, which were quite different from the policies of other small European states, and favored mainly economic sectors producing for domestic markets. In the 1990´s, the liberalization of domestic markets, in response to increasing external pressures, was one of the most important issues in Swiss politics. External pressures, and the changing political preferences of the export-oriented sectors, also triggered important changes in other social and economic policy domains. While much attention has been paid to the recent changes in Scandinavian countries, especially Sweden, the Swiss liberal-conservative model also faced important changes in the recent period. In the paper, I highlight in which ways the processes of globalization and europeanization affect social and economic policies, which can be considered compensation policies. I analyse three main fields (labor market regulations, social policies and domestic regulations favouring domestic economic sectors) where changes occurred in the recent period.