Economy of Andorra
Encyclopedia
Andorra
's GDP
in 2007 was $3.66 billion, with tourism as its principal component. Attractive for shoppers from France
and Spain
as a free port
, the country also has developed active summer and winter tourist resorts. With some 270 hotels and 400 restaurants, as well as many shops, the tourist trade employs a growing portion of the domestic labour force. An estimated 9 million tourists visit annually.
There is a fairly active trade in consumer goods, including imported manufactured items, which, because they are duty-free, are less expensive in Andorra than in neighboring countries. Andorra's duty free status also has had a significant effect on the controversy concerning its relationship with the European Union
. Its negotiations on duty-free status and relationship with the Union began in 1987, soon after Spain joined. An agreement that went into effect in July 1991 sets duty-free quotas and places limits on certain items--mainly milk products, tobacco, and alcoholic beverages. Andorra is permitted to maintain price differences from other EU countries, and visitors enjoy limited duty-free allowances.
The results of Andorra's elections thus far indicate that many support the government's reform initiatives and believe Andorra must, to some degree, integrate into the European Union in order to continue to enjoy its prosperity. Although less than 2% of the land is arable
, agriculture
was the mainstay of the Andorran economy until the upsurge in tourism. Sheep raising has been the principal agricultural activity, but tobacco growing is lucrative. Most of Andorra's food is imported.
In addition to handicrafts, manufacturing includes cigars, cigarettes, and furniture for domestic and export markets. A hydroelectric plant at Les Escaldes, with a capacity of 26.5 megawatts, provides 40% of Andorra's electricity; Spain provides the rest.
, 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 neighboring 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 by a scarcity of arable land
, and most food has to be imported. The principal livestock activity is sheep raising. Manufacturing 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.
, tobacco
, and vegetables must be irrigated; cereal
s, mainly rye
and barley
, are dry-cropped. Most of the cropped land is devoted to hay production for animal feed. Since there is insufficient sunlight on northward-facing slopes and the lands in shadow are too cold for most crops, some southward-facing fields high in the mountains must be used even though they
are a considerable distance from the farmers’ homes.
Tobacco
, the most distinctive Andorran crop, is grown on the best lands. Andorran tobacco is usually mixed with eastern tobaccos, because of its strong quality. Other farm products include cereals, potato
es, and garden vegetables. Grapes are used mainly for raisin
s and for the making of anisette
. The lack of modern methods on Andorra’s family farms is causing the agricultural sector to decrease in importance. Most food is now imported.
, sheep, and goat
s are raised both in the valleys and in some of the higher areas. Cattle are raised mainly for their meat, and there are few dairy cows. When the cattle move upward in the spring, entire families move to temporary villages in the mountains to herd, mow, and plant. Large droves of sheep and goats from France and Spain feed in Andorra in the summer, and the Spanish-owned animals in particular
are looked after by Andorran shepherd
s. On their way back to their native land, many of the animals are sold at annual fairs; the Spanish fairs are usually held in Andorra in September and the French in November. Andorra’s own animal fairs are also held in the fall.
Livestock
includes an estimated 9,000 sheep, 1,100 cattle, and 200 horse
s. Meat production has increased in recent years, but imports account for about 90% of total meat consumption. The milk produced is sufficient for domestic consumption, and some milk has been exported to Spain.
and other freshwater fish, but Andorra imports most fish for domestic consumption from Spain.
s.
s were famous in northern Spain. There are still iron ore deposits in the valley of Ordino and in many of the mountain areas, but access to them is difficult. In addition to iron, small amounts of lead
are still mined, and alum
and building stones are extracted. The sulfurous
waters of Les Escaldes
are used in washing wool
.
country comparison to the world: 168
GDP - real growth rate: 2% (2007 est.)
country comparison to the world: 163
GDP - per capita: purchasing power parity - $42,500 (2007)
country comparison to the world: 15
GDP - composition by sector:
agriculture: NA%
industry: NA%
services: NA%
Population below poverty line: N/A
Household income or consumption by percentage share:
lowest 10%: NA%
highest 10%: NA%
Inflation rate (consumer prices):
3.9% (2007)
country comparison to the world: 59
Labor force: 42,230 (2007)
country comparison to the world: 185
Labor force - by occupation:
agriculture 0.3%, industry 20.8%, services 79% (2007)
Unemployment rate: 0% (2007)
country comparison to the world: 1
Budget:
revenues: $496.9 million
expenditures: $496.8 million (2007)
Industries:
tourism (particularly skiing), cattle raising, timber, banking, tobacco, furniture
Industrial production growth rate: NA%
Electricity - production: N/A GWh
Electricity - production by source:
fossil fuel: 0%
hydro: 40%
nuclear: 0%
other: 60% imported from Spain
Electricity - consumption: NA kWh (2007)
Electricity - exports: NA kWh (2007)
Electricity - imports: NA kWh; note - imports electricity from Spain and France; Andorra generates a small amount of hydropower
Agriculture - products: small quantities of rye, wheat, barley, oats, vegetables; sheep
Exports: $117.1 million f.o.b. (2007)
country comparison to the world: 193
Exports - commodities: tobacco products, furniture
Exports - partners: France 17%, Spain 59.5% (2006)
Imports: $1.789 billion (2007)
country comparison to the world: 154
Imports - commodities: consumer goods, food, electricity
Imports - partners: Spain 53,2%, France 21,1% (2006)
Debt - external: $NA
Economic aid - recipient: none
Currency: Euros have replaced the French franc and the Spanish peseta.
Exchange rates: euros per US dollar - 0.6827 (2008), 0.7306 (2007), 0.7964 (2006), 0.8041 (2005), 0.8054 (2004), 0.886 (2003), 1.0626 (2002), 1,1175 (2001), 0,9867 (January 2000), 0,9386 (1999)
Fiscal year:
calendar year
Andorra
Andorra , officially the Principality of Andorra , also called the Principality of the Valleys of Andorra, , is a small landlocked country in southwestern Europe, located in the eastern Pyrenees mountains and bordered by Spain and France. It is the sixth smallest nation in Europe having an area of...
's GDP
Gross domestic product
Gross domestic product refers to the market value of all final goods and services produced within a country in a given period. GDP per capita is often considered an indicator of a country's standard of living....
in 2007 was $3.66 billion, with tourism as its principal component. Attractive for shoppers from France
France
The French Republic , The French Republic , The French Republic , (commonly known as France , is a unitary semi-presidential republic in Western Europe with several overseas territories and islands located on other continents and in the Indian, Pacific, and Atlantic oceans. Metropolitan France...
and Spain
Spain
Spain , officially the Kingdom of Spain languages]] under the European Charter for Regional or Minority Languages. In each of these, Spain's official name is as follows:;;;;;;), is a country and member state of the European Union located in southwestern Europe on the Iberian Peninsula...
as a free port
Free port
A free port or free zone , sometimes also called a bonded area is a port, port area or other area with relaxed jurisdiction with respect to the country of location...
, the country also has developed active summer and winter tourist resorts. With some 270 hotels and 400 restaurants, as well as many shops, the tourist trade employs a growing portion of the domestic labour force. An estimated 9 million tourists visit annually.
There is a fairly active trade in consumer goods, including imported manufactured items, which, because they are duty-free, are less expensive in Andorra than in neighboring countries. Andorra's duty free status also has had a significant effect on the controversy concerning its relationship with the European Union
European Union
The European Union is an economic and political union of 27 independent member states which are located primarily in Europe. The EU traces its origins from the European Coal and Steel Community and the European Economic Community , formed by six countries in 1958...
. Its negotiations on duty-free status and relationship with the Union began in 1987, soon after Spain joined. An agreement that went into effect in July 1991 sets duty-free quotas and places limits on certain items--mainly milk products, tobacco, and alcoholic beverages. Andorra is permitted to maintain price differences from other EU countries, and visitors enjoy limited duty-free allowances.
The results of Andorra's elections thus far indicate that many support the government's reform initiatives and believe Andorra must, to some degree, integrate into the European Union in order to continue to enjoy its prosperity. Although less than 2% of the land is arable
Arable land
In geography and agriculture, arable land is land that can be used for growing crops. It includes all land under temporary crops , temporary meadows for mowing or pasture, land under market and kitchen gardens and land temporarily fallow...
, agriculture
Agriculture
Agriculture is the cultivation of animals, plants, fungi and other life forms for food, fiber, and other products used to sustain life. Agriculture was the key implement in the rise of sedentary human civilization, whereby farming of domesticated species created food surpluses that nurtured the...
was the mainstay of the Andorran economy until the upsurge in tourism. Sheep raising has been the principal agricultural activity, but tobacco growing is lucrative. Most of Andorra's food is imported.
In addition to handicrafts, manufacturing includes cigars, cigarettes, and furniture for domestic and export markets. A hydroelectric plant at Les Escaldes, with a capacity of 26.5 megawatts, provides 40% of Andorra's electricity; Spain provides the rest.
Overview
TourismTourism
Tourism is travel for recreational, leisure or business purposes. The World Tourism Organization defines tourists as people "traveling to and staying in places outside their usual environment for not more than one consecutive year for leisure, business and other purposes".Tourism has become a...
, 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 neighboring France and Spain have been opened up, providing broader availability of goods and lower tariffs. The banking sector, with its "tax haven
Tax haven
A tax haven is a state or a country or territory where certain taxes are levied at a low rate or not at all while offering due process, good governance and a low corruption rate....
" status, also contributes substantially to the economy. Agricultural production is limited by a scarcity of arable land
Arable land
In geography and agriculture, arable land is land that can be used for growing crops. It includes all land under temporary crops , temporary meadows for mowing or pasture, land under market and kitchen gardens and land temporarily fallow...
, and most food has to be imported. The principal livestock activity is sheep raising. Manufacturing consists mainly of cigarettes, cigars, and furniture. Andorra is a member of the EU Customs Union
Customs union
A customs union is a type of trade bloc which is composed of a free trade area with a common external tariff. The participant countries set up common external trade policy, but in some cases they use different import quotas...
and is treated as an EU member for trade in manufactured goods (no tariffs) and as a non-EU member for agricultural products.
Agriculture
Because of Andorra’s mountainous character, only about 2% of the land is suitable for crops. However, until the tourism sector in Andorra experienced an upsurge, agriculture had been the mainstay of the economy. HayHay
Hay is grass, legumes or other herbaceous plants that have been cut, dried, and stored for use as animal fodder, particularly for grazing livestock such as cattle, horses, goats, and sheep. Hay is also fed to pets such as rabbits and guinea pigs...
, tobacco
Tobacco
Tobacco is an agricultural product processed from the leaves of plants in the genus Nicotiana. It can be consumed, used as a pesticide and, in the form of nicotine tartrate, used in some medicines...
, and vegetables must be irrigated; cereal
Cereal
Cereals are grasses cultivated for the edible components of their grain , composed of the endosperm, germ, and bran...
s, mainly rye
Rye
Rye is a grass grown extensively as a grain and as a forage crop. It is a member of the wheat tribe and is closely related to barley and wheat. Rye grain is used for flour, rye bread, rye beer, some whiskeys, some vodkas, and animal fodder...
and barley
Barley
Barley is a major cereal grain, a member of the grass family. It serves as a major animal fodder, as a base malt for beer and certain distilled beverages, and as a component of various health foods...
, are dry-cropped. Most of the cropped land is devoted to hay production for animal feed. Since there is insufficient sunlight on northward-facing slopes and the lands in shadow are too cold for most crops, some southward-facing fields high in the mountains must be used even though they
are a considerable distance from the farmers’ homes.
Tobacco
Tobacco
Tobacco is an agricultural product processed from the leaves of plants in the genus Nicotiana. It can be consumed, used as a pesticide and, in the form of nicotine tartrate, used in some medicines...
, the most distinctive Andorran crop, is grown on the best lands. Andorran tobacco is usually mixed with eastern tobaccos, because of its strong quality. Other farm products include cereals, potato
Potato
The potato is a starchy, tuberous crop from the perennial Solanum tuberosum of the Solanaceae family . The word potato may refer to the plant itself as well as the edible tuber. In the region of the Andes, there are some other closely related cultivated potato species...
es, and garden vegetables. Grapes are used mainly for raisin
Raisin
Raisins are dried grapes. They are produced in many regions of the world. Raisins may be eaten raw or used in cooking, baking and brewing...
s and for the making of anisette
Anisette
Anisette is an anise-flavored liqueur that is consumed mainly in France, Italy, Portugal, and Spain. It is colorless and, unlike some other anise-based liqueurs, contains no licorice.True anisette is produced by means of distilling aniseed...
. The lack of modern methods on Andorra’s family farms is causing the agricultural sector to decrease in importance. Most food is now imported.
Animal husbandry
For many centuries, until eclipsed by tourism and other service industries, sheep raising was the basis of Andorra’s economy. Andorran mules are still greatly prized. CattleCattle
Cattle are the most common type of large domesticated ungulates. They are a prominent modern member of the subfamily Bovinae, are the most widespread species of the genus Bos, and are most commonly classified collectively as Bos primigenius...
, sheep, and goat
Goat
The domestic goat is a subspecies of goat domesticated from the wild goat of southwest Asia and Eastern Europe. The goat is a member of the Bovidae family and is closely related to the sheep as both are in the goat-antelope subfamily Caprinae. There are over three hundred distinct breeds of...
s are raised both in the valleys and in some of the higher areas. Cattle are raised mainly for their meat, and there are few dairy cows. When the cattle move upward in the spring, entire families move to temporary villages in the mountains to herd, mow, and plant. Large droves of sheep and goats from France and Spain feed in Andorra in the summer, and the Spanish-owned animals in particular
are looked after by Andorran shepherd
Shepherd
A shepherd is a person who tends, feeds or guards flocks of sheep.- Origins :Shepherding is one of the oldest occupations, beginning some 6,000 years ago in Asia Minor. Sheep were kept for their milk, meat and especially their wool...
s. On their way back to their native land, many of the animals are sold at annual fairs; the Spanish fairs are usually held in Andorra in September and the French in November. Andorra’s own animal fairs are also held in the fall.
Livestock
Livestock
Livestock refers to one or more domesticated animals raised in an agricultural setting to produce commodities such as food, fiber and labor. The term "livestock" as used in this article does not include poultry or farmed fish; however the inclusion of these, especially poultry, within the meaning...
includes an estimated 9,000 sheep, 1,100 cattle, and 200 horse
Horse
The horse is one of two extant subspecies of Equus ferus, or the wild horse. It is a single-hooved mammal belonging to the taxonomic family Equidae. The horse has evolved over the past 45 to 55 million years from a small multi-toed creature into the large, single-toed animal of today...
s. Meat production has increased in recent years, but imports account for about 90% of total meat consumption. The milk produced is sufficient for domestic consumption, and some milk has been exported to Spain.
Fishing
The streams are full of troutTrout
Trout is the name for a number of species of freshwater and saltwater fish belonging to the Salmoninae subfamily of the family Salmonidae. Salmon belong to the same family as trout. Most salmon species spend almost all their lives in salt water...
and other freshwater fish, but Andorra imports most fish for domestic consumption from Spain.
Forestry
About 25000 acres (101.2 km²), or 22% of the total land area, is forested. Fuel wood may be freely gathered by anyone, but it may not be bought or sold. Wood needed for building purposes is cut in rotation from a different district each year. For centuries logs have been shipped to Spain. Most reforestation is in pinePine
Pines are trees in the genus Pinus ,in the family Pinaceae. They make up the monotypic subfamily Pinoideae. There are about 115 species of pine, although different authorities accept between 105 and 125 species.-Etymology:...
s.
Mining
For hundreds of years, Andorran forgeForge
A forge is a hearth used for forging. The term "forge" can also refer to the workplace of a smith or a blacksmith, although the term smithy is then more commonly used.The basic smithy contains a forge, also known as a hearth, for heating metals...
s were famous in northern Spain. There are still iron ore deposits in the valley of Ordino and in many of the mountain areas, but access to them is difficult. In addition to iron, small amounts of lead
Lead
Lead is a main-group element in the carbon group with the symbol Pb and atomic number 82. Lead is a soft, malleable poor metal. It is also counted as one of the heavy metals. Metallic lead has a bluish-white color after being freshly cut, but it soon tarnishes to a dull grayish color when exposed...
are still mined, and alum
Alum
Alum is both a specific chemical compound and a class of chemical compounds. The specific compound is the hydrated potassium aluminium sulfate with the formula KAl2.12H2O. The wider class of compounds known as alums have the related empirical formula, AB2.12H2O.-Chemical properties:Alums are...
and building stones are extracted. The sulfurous
Sulfur
Sulfur or sulphur is the chemical element with atomic number 16. In the periodic table it is represented by the symbol S. It is an abundant, multivalent non-metal. Under normal conditions, sulfur atoms form cyclic octatomic molecules with chemical formula S8. Elemental sulfur is a bright yellow...
waters of Les Escaldes
Les Escaldes
Les Escaldes or briefly Escaldes is an urban area in Escaldes-Engordany parish, Andorra. It is located near the nation's capital, Andorra la Vella.-Overview:...
are used in washing wool
Wool
Wool is the textile fiber obtained from sheep and certain other animals, including cashmere from goats, mohair from goats, qiviut from muskoxen, vicuña, alpaca, camel from animals in the camel family, and angora from rabbits....
.
Statistics
GDP: purchasing power parity - $3.66 billion (2007)country comparison to the world: 168
GDP - real growth rate: 2% (2007 est.)
country comparison to the world: 163
GDP - per capita: purchasing power parity - $42,500 (2007)
country comparison to the world: 15
GDP - composition by sector:
agriculture: NA%
industry: NA%
services: NA%
Population below poverty line: N/A
Household income or consumption by percentage share:
lowest 10%: NA%
highest 10%: NA%
Inflation rate (consumer prices):
3.9% (2007)
country comparison to the world: 59
Labor force: 42,230 (2007)
country comparison to the world: 185
Labor force - by occupation:
agriculture 0.3%, industry 20.8%, services 79% (2007)
Unemployment rate: 0% (2007)
country comparison to the world: 1
Budget:
revenues: $496.9 million
expenditures: $496.8 million (2007)
Industries:
tourism (particularly skiing), cattle raising, timber, banking, tobacco, furniture
Industrial production growth rate: NA%
Electricity - production: N/A GWh
Electricity - production by source:
fossil fuel: 0%
hydro: 40%
nuclear: 0%
other: 60% imported from Spain
Electricity - consumption: NA kWh (2007)
Electricity - exports: NA kWh (2007)
Electricity - imports: NA kWh; note - imports electricity from Spain and France; Andorra generates a small amount of hydropower
Agriculture - products: small quantities of rye, wheat, barley, oats, vegetables; sheep
Exports: $117.1 million f.o.b. (2007)
country comparison to the world: 193
Exports - commodities: tobacco products, furniture
Exports - partners: France 17%, Spain 59.5% (2006)
Imports: $1.789 billion (2007)
country comparison to the world: 154
Imports - commodities: consumer goods, food, electricity
Imports - partners: Spain 53,2%, France 21,1% (2006)
Debt - external: $NA
Economic aid - recipient: none
Currency: Euros have replaced the French franc and the Spanish peseta.
Exchange rates: euros per US dollar - 0.6827 (2008), 0.7306 (2007), 0.7964 (2006), 0.8041 (2005), 0.8054 (2004), 0.886 (2003), 1.0626 (2002), 1,1175 (2001), 0,9867 (January 2000), 0,9386 (1999)
Fiscal year:
calendar year