Private foreign investment has become a strategic political tool to promote economic growth, encouraged by states that seek to harness these resources to attract entrepreneurship, talent, innovation and knowledge.
According to the OECD, in addition to the stimulus of the actual investment, foreign investment, especially direct foreign investment, influences growth and increases productivity and efficiency in the use of the resources of the recipient country. Therefore, one of the main effects of foreign investment is the diversification of the economy, with the creation of new economic sectors and increased competitiveness in the existing sectors.
Other effects of foreign investment are the dissemination of good practices regarding company management, technology transfer, the implementation of training programmes and an increase in the tax revenue of the recipient countries. So much so that one of the most commonly used incentives given by governments is to open the respective markets to foreign investors by amending the regulations in order to reduce the protection traditionally granted by many states to certain domestic economic sectors.
Thus, the liberalization of foreign investment together with double taxation agreements, after the recent imposition of direct taxation on companies and economic activities, should put the Andorran economy in a position to compete on equal terms with neighbouring economies and at the same time make Andorra an attractive destination for new sectors and businesses. In short, economic openness is the best way of ensuring a new phase of growth and prosperity in Andorra’s economy and society.