Quality of life in Andorra

Andorra is a small, mountainous country in the Pyrenees mountains in Western Europe on the Iberian Peninsula. It has a border with France to the north and Spain to the south.

For 715 years, from 1278 to 1994, Andorrans lived under a unique co-principality ruled by the French head of state and the Spanish bishop of Urgell. In 1993, this feudal system was modified with the titular heads of state retained, but the government transformed into a parliamentary democracy. The French claim goes back to the Counts of Foix, whose claim passed to the Kings of Navarre, which came to be French kings in the 16th century. France abandoned the claim during the First Republic, but has continually exercised the position since the days of Napoleon, even under Republican governments. Long isolated and impoverished, mountainous Andorra achieved considerable prosperity since World War II through its tourist industry. Many migrant workers (legal and illegal) are attracted to the thriving economy with its lack of income taxes.

Tourism, the mainstay of Andorra's tiny, well-to-do economy, accounts for roughly 80% of GDP. An estimated 9 million tourists visit annually, attracted by Andorra's duty-free status and by its summer and winter resorts. Andorra's comparative advantage has recently eroded as the economies of neighbouring France and Spain have been opened up, providing broader availability of goods and lower tariffs. The banking sector, with its "tax haven" status, also contributes substantially to the economy. Agricultural production is limited—only 2% of the land is arable—and most food has to be imported. The principal livestock activity is sheep raising. Manufacturing output consists mainly of cigarettes, cigars, and furniture. Andorra is a member of the EU Customs Union and is treated as an EU member for trade in manufactured goods (no tariffs) and as a non-EU member for agricultural products.