“We are now obliged to focus much more explicitly on ‘talent’ in capital letters, on qualified and selective investment, as well as on high-quality and differentiated tourism”
We know that economic diversification has been a priority for our leaders for years, especially since the beginning of the liberalization of foreign investments process in 2012. Our economy hit rock bottom with a nominal GDP that stood at 2,888 million euros at the start of the global financial crisis in 2008 and dropped to 2,405 million euros in 2013. The influx of foreign investments and the subsequent economic recovery boosted our nominal GDP to 2,818 million euros in 2019, before the pandemic.
However, after overcoming the effects of the pandemic, we can see that our economy has rebounded strongly over the past two years, reaching a nominal GDP of 3,188 million euros in 2022. However, in 2023, the economy is slowing down, and the growth will be much less significant. Thus, the crisis due to inflation and rising interest rates, which has resulted in an evident loss of purchasing power for our citizens, combined with the effects of uncontrolled foreign speculative real estate investments until recently, one of the causes, although not the only one, of the rising real estate prices, foretells a rather pessimistic year in 2024, unless an unexpected “miracle” changes everything for the better.
Perhaps this miracle is called “economic diversification” and a “partnership agreement with the EU,” who knows? In any case, they won’t resolve our situation in 2024, but they can have a real and positive effect, if everything we are being told is true, starting from 2025 and the subsequent years.
However, it is clear that we must reinterpret and go beyond the concept of “economic diversification” adopted in 2012. It has been demonstrated that, except for the arrival of a few entrepreneurs and innovative projects, there has been a massive influx of small investors from the digital world and, above all, of heritage and real estate investments, which are generally poorly diversified and unqualified, resulting in inflationary speculation and the corresponding government reaction, which has decided to take restrictive measures in this regard, measures that have already been applied in the past by increasing the requirements for new resident investors, either for profit or non-profit purposes.
When we worked on the Andorra Brand a few years ago, the goal was to promote this economic diversification by giving international visibility to our country to attract talent, investment, and tourism. It was implied that the concepts of “qualified” and “differentiated” were implicit, but in the end, that was not the case, and now we are obliged to focus much more explicitly on “talent” in capital letters, on qualified and selective investment, as well as on high-quality and differentiated tourism, as it should have always been.
However, it is also necessary to explicitly acknowledge the considerable work done by Andorra Business, Andorra R+D, Andorra Digital, and Andorra Turismo, true ambassadors of the Andorra Brand, as well as the clusters that have emerged from them, such as the Health and Wellness cluster, the Sports cluster, or the technological ACTINN cluster, bringing together hundreds of members or partners, all engaged in projects, many of which will eventually have a development worth of interest, especially if they finally have the opportunity to open up to the European Single Market.
Precisely, among all the initiatives developed by the ACTINN technological cluster, there are the Speaker’s Corners, one of which is dedicated to sectors considered key for economic diversification, including Fintech, Blockchain, E-Sports, Biotechnology, Health and Wellness (on November 16 at 7 PM at the Roc Blanc Hotel for those who wish to attend or obtain information).
It is evident that if these sectors manage to develop successfully in our country, it is because we have been able to attract proven talent, as well as qualified investment. As for health and wellness tourism, it is clear that it will be much more focused on quality than quantity. But what has happened so far for very few projects and initiatives to thrive, and what can we do to reverse this trend?
Once again, it is worth mentioning the statements of Andorra’s negotiators with the EU that the Association Agreement and membership in the European Single Market will greatly contribute to economic diversification, this time differentiated and of high quality. Is this also valid for the mentioned sectors? So, I conducted research, and it really seems that the options are quite interesting for those who are part of the European Internal Market. Let’s check it out!
In the field of Fintech, for example, this summer, the European Commission approved the new PSD3 payment system and seems more open than ever to support Fintech companies developing technologies and integrating digital services to enhance transaction security in the context of “open banking” in a model evolving toward “open finance.” There are also specific European programs supporting these specialized companies, including Andorran companies in the future, such as the Horizon Europe program.
In the area of Blockchain, the European Commission launched an initiative in February of this year to promote the use of Blockchain technology in the public and private sectors over the next 3 years, examining how to remove legal barriers and facilitate its development. In particular, a consortium of lawyers, technology experts, and academics has initiated the selection process for 20 annual projects until 2026 among specialized companies located in the European Single Market.
In other words, in addition to EU members, Norway, Iceland, and Liechtenstein also have rights, and, of course, in the future, Andorra should also be able to participate. Furthermore, the European Commission wholeheartedly supports blockchain skills development with the Digital Europe program, which provides strategic funding to support talent in this sector, with an investment of 580 million euros.
And what can we say about E-Sports? Well, under the Horizon Europe and Creative Europe programs, and after the European Parliament approved a favorable report last year on the long-term development of the video game and E-Sports ecosystem, the budget allocated to finance projects in this sector has increased, undoubtedly generating talent and employment. In fact, proper development of this sector can contribute to preventing and combating addictions while promoting important values such as fair play, non-discrimination, solidarity, anti-racism, social inclusion, and gender equality. Andorra can also participate in this development once integrated into the EU Internal Market.
Regarding Biotechnology, it is worth mentioning that this sector has been highly anticipated in the country for years. So much so that in 2014, the Andorra Biotechnology Association ANDBIO was created, which fought vigorously for regulation in the field of biomedicine, an achievement that was materialized by Law 3/2023 of January 19 on biomedical research and innovation, as well as the signing of the Convention for the Protection of Human Rights and Dignity of the Human Being with regard to the Application of Biology and Medicine, known as the Oviedo Convention of April 4, 1997.
In this context, the European Commission has highlighted biotechnology in its program for 2024, with the aim of realizing all the benefits that biotechnology companies can bring to increasing competitiveness and modernizing the European industry, given their high growth and productivity potential. Let’s imagine the benefits for Andorra and the emerging initiatives in this field that are developing and think about all the others that can develop in Andorra and expand across Europe.
Finally, in the field of Health and Wellness, we find perhaps the most sensitive sector of all, with the UE ProSalut program at the forefront, which has been of great importance for the countries that benefited from it during the pandemic, although this was not the case for Andorra, and which has already begun a new development phase with the 2021-2027 program. It is clear that Andorra would not have had to juggle and almost perform miracles in such difficult times as when we had to protect ourselves from Covid if it had been part of the European space.
For the negationists and Euro-skeptics, I want to clarify that I am not an unconditional fan of Europe, far from it. Simply, curiosity drives me to make the effort to understand the benefits that the Partnership Agreement with the EU can bring, which are not negligible, compared to the concessions we will have to make. We are at a very delicate moment where our authorities, with the head of government at the forefront, are making the last efforts to obtain the best possible agreement, and it seems that the support of the Bank of France as a lender of last resort should not be entirely ruled out.
That is why, and according to my humble opinion, beyond the disagreements we all have with certain aspects of the current government’s management, I believe that we must now be focused and more united than ever, attentive to the progress of the negotiations, and empathetic toward the efforts made. Then, we will have the opportunity to examine in detail the pros and cons and evaluate them democratically in the planned referendum.
By Pere Augé, CEO and Founding Partner of Augé Holding Group
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