Tourism, the mainstay of Andorra's tiny economy, accounts for roughly 80% of GDP. An estimated 9 million tourists visit annually, attracted by Andorra's duty-free status and summer and winter resorts. Andorra's comparative advantage as a tourist destination has eroded recently 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 Andorra's 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.
For 715 years 1278 to 1994, Andorrans lived under a unique co-principality ruled by the French chief of state and the Spanish Bishop of Urgel. This system was modified in 1993, with the titular heads of state retained but the government transformed into a parliamentary democracy. Long isolated and impoverished, Andorra achieved considerable prosperity through its tourist industry after World War II. Many migrant workers legal and illegal are attracted to the thriving economy and its lack of income taxes.