Arkansas Economic Overview
Known as a major cotton-producing state in the 19th century, Arkansas has since branched out into other areas of agriculture, diversifying its overall economy. Today the state's main agricultural outputs are poultry and eggs, rice, soybeans, sorghum, cattle, cotton, hogs, and milk. Its industrial outputs include food processing, electric equipment, fabricated metal products, machinery, paper products, bromine, and vanadium. Petroleum, natural gas, and coal top the list of minerals produced in Arkansas. The gross state product reached $87 billion in 2005, resulting in a per capita household median income of $35,295.
The world’s largest public corporation, Walmart, was founded and is headquartered in Arkansas, as well as other global companies such as transportation giant J.B. Hunt and Tyson Foods, the second largest meat processor in the world. Since the 1970s these global companies have caused the northwest area of the state where they are located to experience an economic boom. Additionally, automobile parts manufacturers have opened factories in the eastern part of Arkansas to supply auto plants in other states.
The Arkansas economy began with slave-based agriculture, as its fertile plains attracted settlers who brought slaves with them or imported them from the upper South. By 1860, there were about 111,100 African-American slaves in the state—more than a quarter of its population—who mainly worked on cotton plantations. Once the slaves were freed, the plantation system transformed into sharecropping and farm tenancy.
After the Military Reconstruction Act of 1868, more immigrants flocked to the state, resulting in a more diversified population in the Delta area. The eventual construction of railroads toward the end of the 19th century enabled farmers to get their products to a much wider market. As a result, the population increased, along with the developing bauxite and lumber industries. The railroads also brought new development into different parts of the state, including the Ozarks, where some areas were developed as resorts. These resorts included spas, horseracing, and other forms of entertainment that appealed to tourists.
Although World War I caused a boom in prices for agricultural products and an increase in profits for the bauxite, coal, timber, and zinc industries, the post-war period was marked by labor and race riots. A major flood in 1927, followed by a severe drought in 1930, caused havoc on many farms and left numerous families on the brink of starvation. As banks closed during the Great Depression of the 1930s, almost 40 percent of the state population was unemployed.
The federal New Deal programs, most notably the Works Progress Administration, hired tens of thousands of Arkansans to build roads, public buildings, state parks, and other projects. After World War II, small farms merged into larger ones, soybean production surpassed that of cotton, and larger poultry houses with state-of-the-art technology were established.
In the 1950s, textile and shoe factories moved into Arkansas, employing mostly women. The existence of major food processing plants drew trucking firms to the state, resulting in the largest concentration of nationwide long-distance haulers. Sam Walton opened his first Wal-Mart Discount City store in Arkansas in 1962, and by 1991, Walmart had become the nation’s largest retailer.
Today, due to factories moving to foreign countries where labor costs are much cheaper, thousands of jobs in Arkansas have disappeared, and the state ranks last in workforce education. While northwest Arkansas and the area around Little Rock experience economic growth, much of the rest of the state suffers from stagnating or declining economic growth.
More than a third of the state is farmland. Some 287,000 workers are employed in the agriculture production and processing industry at annual wages of $8.9 billion. Some two-thirds ($4.6 billion) of the state’s agricultural revenue of more than $7 billion is from livestock products. Broilers (young chickens) are the most important livestock products produced in Arkansas, which is ranked second in broiler production.
Poultry and eggs account for almost half of the state's livestock production at $3.7 billion. Cattle and calves account for $625 million, and milk and dairy products from cows are $44 million. Arkansas is the birthplace of warm water aquaculture in the United States and ranks second among states in the industry with $167 million in revenue. This compares to revenue from hogs and pigs of $84 million. The production of other animals, such as horses, ponies, sheep, goats, and their products, adds up to more than $17 million.
Arkansas is the foremost rice grower in the United States, providing almost half the nation's supply with a crop worth some $1.45 billion. Soybeans ($1 billion), cotton ($348 million), wheat ($326 million), and corn for grain ($290 million) are Arkansas's five most valuable crops.
Besides the value of the crops themselves, related industries such as fertilizer, seed, and transportation contribute to the state’s economy. Major agricultural companies such as AgriPro Wheat, Syngenta Seeds, Inc., and Pioneer have located wheat-breeding stations in the state. Arkansas is ranked 10th in the nation in soybean production.
BANKING AND FINANCIAL SERVICES
Headquartered in Little Rock, Stephens Incorporated is the largest off-Wall Street investment firm in the country. Additionally, Arkansas has more than 130 banking institutions throughout the state, with more that $54 billion in total assets. A small bank in Arkansas is one with less than $75 million in assets, whereas a large bank has more than $225 million. Some of the most widespread banks are First Arkansas Bank and Trust, First Federal Bank of Arkansas, and First National Bank of Eastern Arkansas.
Arkansas has 58 newspapers, magazines, and other publications; 23 commercial television stations; 10 non-commercial television stations; 29 non-commercial radio stations; and 26 cable television networks. Approximately 28 different telephone companies provide service for the residents of Arkansas, with a total of 1.4 million access lines. The Arkansas Telephone Company, with 9,000 access lines, has been operating for almost 100 years, South Arkansas Telephone Company is a family-owned business that’s been operating for more than 80 years, and Arkwest Communications has been doing business for 70 years.
The construction industry in Arkansas employed 92,000 workers in 2009, a drop of 19 percent from a high in 2007, due to the recent worldwide economic crisis. Nonresidential construction spending in Alabama is approximately $8.5 billion annually, and the average pay of a construction worker is roughly $39,300. The demand for affordable housing outstrips the availability of affordable housing in the northwest section of the state.
Arkansas is one of the lowest-performing states academically, despite major improvements over the past decade in funding and student achievement. Some 452,000 public school students attend the primary and secondary schools in the state.
In addition, there are 23 colleges and universities in Arkansas, with the Arkansas State University System having a total of 17,400 students in 10 campuses. The University of Central Arkansas is the second largest university according to enrollment, with more than 12,950 students. The Arkansas 21st Century Community Learning Centers provided around $9 million in grants to after-school programs for students in prekindergarten through 12th grade in 2008.
Arkansas has 41 gas and electric utilities, including four investor-owned electric utilities, one generation and transmission cooperative utility, and 18 cooperatives that comprise the Electric Cooperatives of Arkansas. The state is also home to four companies that sell natural gas. Some 51 percent of Arkansas’ electricity is generated by coal, 31 percent comes from nuclear energy, 11 percent from natural gas, and 7 percent from other sources. Total revenues from the sale of electricity are $3.27 billion. Arkansas ranks fifth in the nation in average of gas gallons used per registered vehicle and 13th highest in energy consumption per capita.
Arkansas was involved with the film industry even before the state passed the Motion Picture Incentive Act of 2009. The incentives included provide native Arkansans with jobs and encourage production companies to return to Arkansas repeatedly and to make long-term investments in the state through rebates of 15 percent for production costs. In addition, a 10 percent rebate is offered for the payroll of employees who are full-time residents of the state.
There are 68 domestic insurance firms doing business in Arkansas, with around half specializing in life and health insurance. Some 1,470 foreign insurance firms also operate in the state, with more than half of these specializing in property and casualty insurance. Life and health premiums total around $5.2 billion annually, and property and casualty premiums are around $3.7 billion. About 74 percent of Arkansans with health insurance receive it through their place of employment. However, Arkansas has the second-lowest number of employers offering sponsored health insurance nationwide (45 percent). About 16 percent of Arkansas’s population of roughly 2,855,000 is uninsured.
Approximately 1,630,000 workers are employed in manufacturing in Arkansas, producing goods worth more than $46 billion. The leading manufactured products in Arkansas are food products including animal feed, bakery goods, poultry, meats, milk, rice, canned vegetables, cottonseed oil, and soft drinks. Arkansas is home to the world's largest poultry producer and processor, Tyson Foods, which has annual revenues of $26 billion.
Other products manufactured in Arkansas include lumber, plywood, pulp, and paper at $6.1 billion, industrial and agricultural chemicals at $2.3 billion annually, electrical products (electric motors, household appliances, measuring and lighting devices) at more than $4.2 billion, fabricated metal products (valves, pipe fittings) at more than $3.1 billion, machinery (heating and cooling equipment, metalworking machinery) at $3.2 billion, plastics and rubber products at $3.1 billion, and transportation products (motor vehicle/aerospace parts) at more than $3.6 billion.
MINING AND EXTRACTION
The mining industry in Alabama generates revenues of approximately $2.7 billion, and its almost 7,000 employees earn a combined annual payroll of $365 million. Coal mines account for $929 million of the total, and cement brings in another $369 million. Stone quarry is next with $303 million, followed by lime at $164 million. Sand and gravel account for $75 million. Alabama ranks third in the production of common clays, with revenues of more than $45 million. An Arkansas miner earns an average annual wage of $54,745.
There are more than 2,300 charitable nonprofit institutions in Arkansas, where poverty is rampant, especially in small rural towns. In addition, there are more than 270 foundations in the state with more than $2.3 billion in assets, which distribute some $288 million in grants. Taxpayers from Arkansas who itemized their deductions on their income tax forms reported an average of $4,450 in charitable contributions. The reporting NPOs in Arkansas have a combined $8.5 billion in expenditures annually and combined assets of $8.1 billion. Around 80 percent of the revenues from these NPOs come from selling services or goods, while 12 percent come from donations from individuals, corporations, and foundations.
Several global companies are headquartered in northwest Arkansas, including Walmart (the world's largest public corporation by revenue in 2008), whose headquarters are in Bentonville. Tyson Foods, in Springdale, is the world's largest processor and marketer of chicken, beef, and pork; the second-largest food company in the Fortune 500; and a member of the S&P 500. There are 80 Walmart stores in Arkansas, and the first now functions as a museum. More than 47,000 employees work in Walmart stores in Arkansas at an average hourly wage of $11.23. In fiscal year 2009, the corporation collected more than $383.7 million in sales taxes for the state of Arkansas and paid more than $161.4 million in state corporate income tax.
Arkansas’s Science and Technology Authority’s stated mission is to bring the benefits of science and advanced technology to the people and state of Arkansas. To this end, the authority has given grants totaling $9 million to foster research. In addition, Arkansas offers tax incentives for university-based research and for technology-based enterprises. There are more than 260 IT companies operating in the state, with around 20,400 employees.
There are several organizations which were created with the goal to encourage biotechnology, such as the Arkansas Biotechnology Association and the Arkansas BioVentures Association, a business accelerator at the University of Arkansas designated to encourage development in the medical sciences. It was established to facilitate the startup of new technology-based business enterprises and to enhance the growth of job opportunities in Arkansas.
Arkansas’s location along the Mississippi, Arkansas, and Red Rivers has provided it with more than 1,000 miles of navigable waterways that link the state with ports around the world. Little Rock has more than 2,340 employees in its Port Industrial Park, which operates a harbor and railroad. The port at Pine Bluff has received capital investments of more than $97 million and employs more than 810 workers.
Arkansas’s rail and river connections have ensured that transportation jobs continue to be an important source of employment. The Central Arkansas Transit Authority operates a fleet of buses covering almost 8,000 miles daily. Nine interstate highways traverse the state. The Little Rock National Airport is Arkansas’ largest commercial service airport, serving 2.3 million passengers. The Northwest Arkansas Regional Airport has 1.17 million passengers and 164 thousand tons of cargo passing through it annually. In addition, Arkansas is home to J.B. Hunt, one of the largest transportation logistics firms in the country, with 16,000 workers, more than 12,000 trucks, and revenues of more than $3 billion a year.
TRAVEL AND TOURISM
Arkansas boasts clear, clean lakes and majestic mountain ranges. There are three national forests, seven National Park Service sites, 45 state parks, 13 major lakes, the Ozark and Ouachita Mountain ranges, and more than 9,700 miles of streams and rivers teaming with abundant wildlife. Around 60,000 visitors come to Arkansas’s Crater of Diamonds, the only public diamond mine in the world, and an average of two diamonds per day are taken home by tourists.
Tourism generated about $5.6 billion in 2008, comprising 5.6 percent of the gross domestic product. The tourism tax, which is collected at hotels and other facilities, generated around $12 million that year. Approximately 59,600 people work in the tourism industry, with a combined annual payroll of $1.05 billion.
Arkansas pharmaceutical companies employ an estimated 12,300 workers. The state is home to more than 700 pharmaceutical companies, such as Eli Lilly and Company, Janssen, Roche Labs, BioTech Pharmacal Inc., the Blansett Pharmaceutical Company Inc., and numerous other pharmaceutical companies involved in drug production and research. One is DCV Technology, Inc., which is dedicated to the development of therapeutic vaccines for the treatment of cancer, based on core technologies developed at the University of Arkansas for Medical Sciences (UAMS). More than $574 million in annual sales are generated by these companies.
-World Trade Press