The principal industry is tourism, although the country also earns foreign income from being a tax haven. Furniture and brandies are local products. Being at an elevation of 1,023 metres (3,356 ft), it is the highest capital city in Europe and a popular ski resort.
The site of Andorra la Vella (literally, "Andorra the City", not "Andorra the Old" as is often misunderstood) has been settled since prior to the Christian era—notably by the Andosin tribe from the late Neolithic. The state is one of the Marca Hispanica created and protected by Charlemagne in the eighth century as a buffer from the Moorish settlers in the Iberian Peninsula.
The settlement of Andorra la Vella has been the principal city of Andorra since 1278 when the French and the Episcopal co-princes agreed to joint suzerainty. Andorra la Vella's old town—the Barri Antic—includes streets and buildings dating from this time. Its most notable building is the Casa de la Vall—constructed in the early sixteenth century—which has been the state's parliamentary house since 1702. Andorra la Vella was, during this period, the capital of a largely isolated and feudal state, which retained its independence due to this principle of co-sovereignty.
Well into the twentieth century, the area around Andorra la Vella remained largely forgotten; indeed the state was not part of the Treaty of Versailles, simply because it was not noticed. After political turmoil in the 1930s and an attempted coup by Boris Skossyreff, an informal democracy developed.
In 1993, the country's first constitution formalised this parliamentary democracy with executive, legislative, and judicial branches located in Andorra la Vella.
During this period, Andorra also developed as a tax haven, resulting in the construction of modern banking offices in Andorra La Vella. The city also developed its skiing facilities, to the extent that Andorra la Vella was Andorra's applicant city for the XXI Olympic Winter Games, the 2010 Winter Olympics. However, Andorra la Vella was not selected by the IOC as a candidate city, following the evaluation report of an IOC commission. It also hosted both the 1991 and 2005 Games of the Small States of Europe.