Andorra

Andorra has survived unchanged for 745 years by being too small to conquer and too useful to eliminate. The microstate's borders have not shifted since 1278, when a feudal treaty created the world's only co-principality—still ruled jointly by the Bishop of Urgell and (since 1607) the French head of state. This arrangement began as a buffer between competing powers; today it persists as a functioning constitutional democracy of 77,000 people.

The Pyrenees location that once isolated Andorra now drives its economy. Tourism accounts for 80% of GDP, with 9 million visitors annually drawn to ski resorts in winter and mountain hiking in summer. Banking and financial services contribute another 13-15% of GDP, built on corporate tax rates capped at 10%—low enough to attract capital but reformed enough to exit the OECD tax haven list in 2018. Duty-free shopping rounds out the service economy.

Andorra exemplifies refugia economics: a small territory that survives by exploiting a niche between larger neighbors. France and Spain benefit from having a neutral jurisdiction for banking and a destination for tax-efficient shopping. Andorra benefits from their protection and market access. The $6 billion economy (2024) grew 2.1% that year, with the IMF projecting slower 1.7% growth for 2025.

Climate change poses the principal threat to this equilibrium. An economy reliant on winter tourism faces existential risk as temperatures rise. Andorra is exploring diversification into technology and renewable energy, but shifting a 745-year-old niche requires time the climate may not provide. The principality that survived medieval conflicts and two world wars must now adapt to a warming world.