Andorra is a small nation in Europe, landlocked between the French and Spanish borders. For the majority of the country’s history, both French and Spanish leaders ran the government. This form of rule continued until 1993, when the feudal system that ran the nation was modified, leaving the co-princes of the nation to work alongside a parliamentary democracy to execute the rule of the country.

The Poverty Rate in Andorra

Before World War II, the majority of the citizens in Andorra lived in the same way they did in the Middle Ages. They primarily survived on small-scale farming and smuggling. In the modern day, this trend persists, and many citizens continue to live in old farmhouses from this era in history.

The subsequent increase in European tourism in the 1950s aided the country in developing its more rural regions. As tourism increased, old farm houses and undeveloped land became family hotels and restaurants, allowing for people in a lower income bracket to participate in the economy. When measured in 1996, Andorra had a GDP per capita of $18,000, which was higher than its neighbor, Spain.

The service-based economy has proven to be effective at maintaining a low poverty rate in Andorra. When measured in 1998, the country had a 1.62 percent rate of inflation. This low inflation rate and participation in the country’s economy have allowed even the poorest people to have a high standard of living. No extreme cases of poverty have been recorded in the country in recent history.

The Takeaway

Andorra is a country that made the most of the increased tourism in Europe after World War II. By allowing its citizens to convert their small farms into business, the poverty rate in Andorra has managed to remain low. Other European nations that have small economies should emulate the model that Andorra practices due to its effectiveness in maintaining a low poverty rate.

– Nick Beauchamp

Photo: Flickr