UNESCO SCIENCE REPORT

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UNESCO SCIENCE REPORT A few adjustments and the future looks bright for the countries of the European Free Trade Association. Hans Peter Hertig Bertrand Piccard, a Swiss psychiatrist and balloonist who initiated the Solar Impulse project, waves after the solar-powered aircraft Solar Impulse 2 arrives at Nanjing Lukou International Airport early Wednesday on April 22, 2015 in Nanjing, Jiangsu province of China. Solar Impulse 2, the first aircraft completely sustained by solar power, took off from Myanmar’s second biggest city of Mandalay early Monday and after a 20-hour flight, the Solar Impulse 2 airplane touched down in south China’s Chongqing Jiangbei International Airport and stayed at Chongqing, the fifth flight of a landmark journey to circumnavigate the globe powered solely by the sun, for twenty days. Photo: © ChinaFotoPress/Getty Images 296
11 . European Free Trade Association Iceland, Liechtenstein, Norway, Switzerland Hans Peter Hertig European Free Trade Association INTRODUCTION A relatively quick recovery The four countries which make up the European Free Trade Association (EFTA) are among the wealthiest in the world. Liechtenstein has a strong banking sector and successful companies in machinery and the construction business. Switzerland does very well in the services sector – particularly in banking, insurance and tourism – but also specializes in high-tech fields such as microtechnology, biotechnology and pharmaceuticals. Norway has built up its wealth by exploiting North Sea oil since the 1970s and Iceland’s economy is dominated by the fishing industry, which accounts for 40% of exports. In order to reduce their dependency on these traditional sources of income, the two Nordic states have developed capacities in a wide range of knowledge-based sectors, such as software design, biotechnology and environment-related technologies. This solid base and the resultant high per-capita income didn’t prevent the four EFTA countries from being buffeted by the global financial crisis in 2008–2009; however, they suffered to varying degrees, like most countries in the western hemisphere (Figure 11.1). Iceland was particularly shaken, with three of its largest banks collapsing in late 2008; the country’s inflation and unemployment rates more than doubled to almost 13% (2008) and 7.6% (2010) respectively, while central government debt almost tripled from 41% (2007) to 113% (2012) of GDP as the country struggled to conjugate the crisis. These same indicators barely budged in Liechtenstein, Norway and Switzerland, which continued to count unemployment levels of just 2–4% on average. Iceland has since put the crisis behind it but recovery has been slower than for its neighbours. Growth in all four countries has nevertheless stalled recently (Figure 11.1) and there are some question marks regarding the short-term outlook. The strong, overrated Swiss franc 1 may have a negative impact on key sectors of the Swiss economy, such as the export industry and tourism, suggesting that predictions for GDP growth in 2015 will probably need to be lowered. The same may be necessary for Norway as a result of the slump in oil prices since 2014. Not surprisingly, Europe 2 is EFTA’s main trading partner. In 2014, it absorbed 84% of Norway’s merchandise exports and 1. In January 2015, the Swiss franc soared by almost 30% against the euro, after the Swiss National Bank removed the cap it had imposed in 2011 to prevent such a scenario. Since then, the effect has softened to a 15–20% rise. 2. Here, Europe encompasses the EU, Southeast Europe and Eastern Europe but not the Russian Federation. 79% of Iceland’s but only 57% of Switzerland’s own exports, according to the United Nations COMTRADE 3 database. When it comes to imports of European goods, however, Switzerland takes the lead (73% in 2014), ahead of Norway (67%) and Iceland (64%). EFTA began diversifying its trading partners in the 1990s and has since signed free trade agreements 4 with countries on every continent. Similarly global is the EFTA countries’ engagement in the field of science and technology (S&T), albeit with a clear focus on Europe and the activities of the European Commission. Part of Europe but different EFTA is an intergovernmental organization devoted to promoting free trade and economic integration in Europe. Its headquarters are based in Geneva (Switzerland) but another office in Brussels (Belgium) liaises with the European Commission. Twelve years after EFTA was founded in 1960, it counted nine member states: Austria, Denmark, Finland, Iceland, Norway, Portugal, Sweden, Switzerland and the UK. All but three had joined the European Union (EU) by 1995: Iceland, Norway and Switzerland. Liechtenstein’s adhesion since 1991 brings EFTA’s current membership to four. A turning point in EFTA’s development came with the signing of an agreement with the EU on the creation of a single European market. The Agreement on the European Economic Area (EEA) was signed by Iceland, Liechtenstein and Norway and entered into force in 1994. It provides the legal framework for the implementation of the four cornerstones of the single market: the free movement of people, goods, services and capital. The agreement established common rules for competition and state aid and promoted cooperation in key policy areas, including research and development (R&D). It is through this agreement that three of the four EFTA members participate in the EU’s main R&D activities as associated states on the same footing as the EU member states. Switzerland, on the other hand, was unable to sign the EEA treaty, even though it had participated actively in drawing it up, owing to a negative vote in a Swiss referendum in November 1992. A bilateral agreement with the EU nevertheless allows Switzerland to take advantage of the main EU instruments in place, including the seven-year framework programmes for research and innovation, the 3. Liechtenstein’s trade is covered in Swiss statistics. 4. See: www.efta.int/free-trade/fta-map Chapter 11 297
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UNESCO SCIENCE REPORT Towards 2030
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