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Despite being a small country (area-wise), how Switzerland can sustain a high cost of living?

I get the logic that the pay of employees would be proportionally higher, so they can sustain a high cost of living. Not the entire country is mountainous, at the least the cost of living should be comparable to neighboring countries especially in the plains.

How does it be able to sustain the economy of border areas where people can do shopping in the neighboring countries?

Am I asking the right question? Clearly, there is some piece of the puzzle about Switzerland, that I don't get.

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