Delaware Economic Overview
Despite being the second smallest state in the U.S., Delaware is known as the corporate and credit card capital of the world. Its prosperity is due in part to its convenient location near three of the top 20 most populous cities in the U.S.: New York, Philadelphia, and Baltimore. But it is largely due to the state's corporate- and finance-friendly laws, which make Delaware very attractive to large corporations and banks.
Delaware is divided into three counties, the mostly industrial New Castle, which is home to Delaware’s largest industrial city, Wilmington, and the more agricultural Sussex and Kent Counties in the south. Delaware's top industrial sectors are chemicals, banking and finance, auto parts, and food packaging and canning. Its top agricultural products are broiler chickens, soybeans, corn, and vegetables. According to the U.S. Bureau of Economic Analysis, in 2008 Delaware had the highest gross state product per capita in the U.S. at $56,401 per person. Delaware’s total gross state product (GSP) for 2008 was $61 billion.
Delaware's economic development can be traced back to Dutch settlers, who founded the first European settlement in the region in 1631 and began trading in beaver furs with Native Americans soon thereafter. In 1638, the Dutch were soon joined by Swedes, who established the first permanent European settlement in the Delaware Valley near what is now Wilmington.
Drawn by the abundance of farmland, Quakers came from nearby Philadelphia, along with British, Scottish, and Irish immigrants. As immigration decreased, African slaves were brought into the region. The lower counties along the Delaware River became slave societies, and tobacco became their prime cash crop. Shortly before the American Revolution, Delaware began to shift to mixed agriculture and decrease its economic dependence on slaves.
With its many rivers and creeks, Delaware became one of the first states in the U.S. to develop a water-powered industry. The famous Du Pont family immigrated to the United States in 1800 and established America's largest gunpowder and explosives factory along the Brandywine River. It was soon joined by textile and tobacco mills, as well as America's first continuous-roll paper mill.
By the early 19th century, industry had begun to build up around the city of Wilmington, whose business community lobbied for better transportation, leading to the building of turnpikes, railroads, and the Chesapeake and Delaware Canals. In 1899 Delaware passed its landmark General Corporation Law, which encouraged businesses to establish themselves in the state by subjecting them only to Delaware law, even if they did business in other states.
As a result, Delaware soon became known as a corporate haven, eventually hosting more than 50 percent of American publicly traded corporations and 60 percent of the Fortune 500 companies. By the early 20th century, E. I. Du Pont de Nemours and Company had become a leading chemical producer and was pivotal in establishing Delaware’s thriving chemical manufacturing industry, today valued at about $6.5 billion. Today, credit card banking has replaced the chemical industry as Delaware’s leading private employer, worth about $12.8 billion to its GSP.
Delaware's two largest crops are corn (for grain) and soybeans, followed by wheat, vegetables, and barley. Delaware produces approximately 19 million bushels of corn each year. The total market value of the state's crops is approximately $210 million a year.
Sussex County is one of the nation's main centers for the production of broiler chickens, raising more than 200 million a year. Poultry is Delaware's largest agricultural product and generates about 75 percent of farm income, or approximately $870 million a year.
Delaware's aquaculture industry is small, with three aquaculture farms producing finfish, baitfish, crustaceans, and mollusks. According to the U.S. Department of Agriculture's 2005 Census on Aquaculture, this accounts for $1.87 million in yearly sales.
BANKING AND FINANCIAL SERVICES
Ever since the passage of its liberal General Corporation Law of 1899, Delaware has been famous for its business-friendly climate and is often called "the corporate capital of the world." More than two-thirds of the companies listed on the New York Stock Exchange are incorporated in Delaware, which is the legal home to more than 850,000 companies from throughout the world.
The state’s General Assembly has amended the General Corporation Law over the years to meet new conditions. It was most recently revised in 1967, to ensure the continuation of Delaware’s prominence in corporate law. In the same spirit, the assembly passed the Financial Center Development Act of 1981, which eased the way for credit card companies, such as Bank of America and Chase Card Services, and national banks to establish operations in the state. Since then, Delaware has also earned the reputation of being "the credit card capital of the world" and has passed a dozen more significant laws to facilitate the securities, credit card, banking, and other financial service industries. Delaware’s finance industry employs some 40,000 people and contributes about 32 percent to its GSP.
Delaware has a robust communications industry, with eight newspapers and 36 radio stations, and is served by the television markets of Philadelphia and Salisbury/Dover. Delaware boasts more than 70 broadcasting companies, which employ about 1,000 people and altogether generate more than $263 million in sales each year.
Delaware has several major institutions of higher education, led by the University of Delaware, which was established in 1743. With a staff and faculty of over 4,000 people, the University of Delaware is one of the state’s largest employers. Another landmark institution is Delaware State University, initially established as an African-American college in 1891.
Delaware’s small population of some 785,000 makes having schools in medicine, dentistry, and veterinary science too expensive to operate, so the state has arrangements with colleges in other states to reserve places for Delaware students. Approximately 36 percent of the state’s 18- to 24-year-olds are enrolled in college, which is slightly above the national average. Educational services contributed about $339 million to its GSP in 2008 and paid $276 million in salaries.
Delaware has few energy sources, aside from potential wind power along the Atlantic Coast and Delaware Bay. The lowest consumer of energy among U.S. states, Delaware has one medium-size oil refinery in Delaware City. The state obtains its crude oil from other suppliers via the Delaware River, and supplies petroleum-based products to regional markets.
As a home to leading chemical manufacturers and renewable energy research faculties, Delaware is a national leader in fuel cell, solar photovoltaic, vehicle-to-grid transport technology, green chemistry, and biofuel research.
Although Delaware has one of the lowest levels of energy consumption in the nation, its economy is energy intensive. Delaware’s industrial sector is the state’s largest consumer of energy, due to its energy intensive industries of petroleum refining and chemical manufacturing. Delaware is one of only two U.S. states (the other is Rhode Island) that does not impose taxes on raw materials converted into energy.
Delaware's entertainment industry includes performing arts, spectator sports, museums, historical sites, natural parks, amusement parks, gambling, and recreational industries, and employs about 7,500 people. Delaware’s arts and entertainment industry generated approximately $420 million to its GSP in 2008. The state’s film industry received a boost in 2009, with the launching of the Delaware Film Initiative, an incentive plan based on the equation that one job in the film industry creates four jobs in six other industries: hotel, retail, tourism, construction, restaurants, and transportation.
The insurance industry is a major contributor to the economy of Delaware. Property and casualty insurers directly employ more than 600 people in the state, bringing in about $54 million in salaries. Insurance companies pay the state some $94 million in taxes on premiums every year. They hold approximately $1.5 billion dollars in municipal bonds and invest in a wide variety of public projects. Insurers' purchase of general obligation bonds also fund ongoing government activities. Insurers in Delaware pay out about $2.2 billion each year in claims compensation.
The chief manufacturing products of Delaware are chemicals and pharmaceuticals, worth around $1.9 billion, followed by food products ($0.5 billion); computer and electronic products ($0.4 billion); petroleum, coal, and paper products ($0.3 billion), electrical equipment and appliances; medical equipment; motor vehicles and parts; plastic and rubber products ($0.2 billion); and fabricated metal products ($0.1 billion).
Delaware is home to chemical manufacturing giants AstraZeneca and E.I. DuPont de Nemours & Co. Automobile companies General Motors and Daimler Chrysler have established assembly plants in the state. Delaware's manufacturing industry, which makes up 7.6 percent of the state's economy, produces approximately $4.6 billion worth of manufactured products each year. Delaware manufacturers employ a total of 31,500 people.
MINING AND EXTRACTION
Mining and extraction is a significant industry in Delaware, which is home to 56 companies in the sector that bring in a combined annual income of about $126 million and employ about 580 people. Roughly half of these companies are involved in oil and gas exploration and extraction in the Delaware Basin, which generates a combined revenue of some $83 million each year.
According to the U.S. Geological Survey, Delaware's non-fuel raw mineral production is valued at approximately $22.4 million. This figure does not include the mining of magnesium compounds, a large industry in Delaware, whose figures the state declines to disclose to avoid revealing company proprietary data. Delaware's leading non-fuel minerals are sand and gravel for construction, followed by magnesium compounds, which are used to manufacture chemical and pharmaceutical products.
Delaware has roughly 1,000 public charity and not-for-profit organizations, or about 12.3 nonprofit organizations for every 10,000 residents. These organizations generate revenue of about $4.5 billion each year and have some $4 billion in expenditures. Delaware’s principal nonprofits are small. Fewer than 25 percent had budgets of $1 million or more in 2007 and more than a third operate at a loss.
About $530 million of the nonprofits’ budgets comes from contributions, while more than a third of their budgets is raised on their own, from service revenues, dues, or the sale of goods. Delaware's not-for-profit sector caters to people of all ages and walks of life, and includes medical organizations, support groups, church groups, and foundations specific to Delaware.
Delaware has a robust retail industry, which contributes nearly $900 to its GSP. Delaware’s largest retail employers include Walmart, which employs about 3,800 people; Sears, which employs almost 2,000; and Home Depot, which employs approximately 1,100. Delaware's retail establishments generate over $10.9 billion a year in sales and employ more than 53,000 people. The state’s business-friendly tax policies encourage the establishment of numerous small businesses.
Delaware is a hub for health information and biotechnology. The Delaware Technology Park, a 40-acre research center, is a collaborative effort of the state government, academic institutions, and industry that supports research institutions in the region. These include the Delaware Biotechnology Institute—which carries out research in plant molecular biology, avian genomics, biomedical research, bioinformatics, marine environmental genomics, protein structure and functions, and biomaterials—and the Fraunhofer Center for Molecular Biotechnology.
The park houses more than 60 companies, which have received some $250 million in research grants since its opening in 1993. Delaware’s highly skilled workforce, high investment in research, and development and public/private partnership makes the state an attractive location for start-up companies.
Biotechnology is one of the fastest growing industries in the state, which is home to industry leaders such as Adesis, DuPont, MIDI, ANP Technologies, and Quest Pharmaceutical Services, as well as the U.S. headquarters of AstraZeneca, one of the largest pharmaceutical companies in the world. Biotechnology and life science companies employ more than 17,000 people and directly contribute more than $1.7 billion to the GSP.
Wilmington is a major Atlantic port and is home to Delaware's largest commercial airport. The Port of Wilmington serves more than 400 ships annually, handling more than four million tons of cargo each year, including 1.7 million tons of containerized cargo and 130,000 automobiles. The port also handles 942,000 tons of liquid bulk cargo and 1.4 million tons of general and dry bulk cargo. Besides being the leading U.S. port for imports of fresh fruit, produce, and juice concentrate, Wilmington is the world's largest banana-handling port.
Delaware has 10 airports, including four business class airports, five general aviation facilities, and one civilian/military airport. The economic impact of Delaware’s airports, in terms of annual income, airport spending by businesses, and tax revenues, is estimated to be worth about $989 million. The I-95 interstate highway, considered the East Coast's "Main Street," traverses Delaware, carrying some 100 million tons of freight worth about $66.1 billion. Delaware also transports freight by water though the Chesapeake and Delaware Canal.
TRAVEL AND TOURISM
Nearly eight million tourists visit Delaware's historic attractions, attend conferences, and enjoy Delaware's beaches each year. Tourism contributes more than $1.5 billion to the state’s economy. Delaware is famous for tax-free shopping that makes it attractive to both retailers and consumers. Home to some of the America's top beaches, Delaware's Rehoboth Beach was selected as one of the top five U.S. boardwalks by the Travel Channel, while Dewey Beach is considered the skimboarding capital of the East Coast. Delaware has many historical and cultural attractions, as well as museums, sporting events, and gambling venues such as Dover Downs.
Just as Delaware is known as the corporate and credit card capital of the world, Wilmington is considered the world’s chemical capital. The foundations of Delaware's thriving chemical industry were initially laid by the DuPont Family in 1802. E.I du Pont de Nemours and Company, initially established by French immigrant Eleuthere Irenee Du Pont as a large gunpowder factory, is the world’s second largest chemical company (behind BASF) in terms of market capitalization and the fourth largest in terms of revenue, which was calculated at $38.1 billion in 2008.
In the early 20th century, Du Pont was a world leader in the polymer revolution and developed many successful materials such as nylon, Teflon, and Lycra. It was also involved in the development of refrigerants, such as Freon (CFCs) and, later on, more environmentally friendly refrigerants. It has also made significant contributions to pigment development, namely synthetic pigments and paints, such as Chroma Flair.
Delaware's chemical industry directly employs more than 4,400 people and is indirectly responsible for another 11,400 jobs in the state. Delaware is home to many start-up companies in the chemical industry and has one of the highest number of patents per 100,000 people in the U.S., at 82.1 patent applications per 100,000 workers.
-World Trade Press