Arkansas Economy

Arkansas Economy

Arkansas General Economy

The economy of Arkansas is mainly based on agriculture farming, or diversification of this sector. Examples of diversification are canned vegetables, edible oil, animal feed, paper and cloth. Manufactured products include electrical products, meats, poultry, rice, chemicals, metal products and so on. Natural oil and gas are also big revenue earners for this state. There is considerable mining activity too with products like clays, cement, limestone, quartz, gypsum, and diamonds and so on. Services also contribute their fair share to the economy such as health care, government services, transportation, communications, utilities and so on.

Let us now study each aspect of the economy of Arkansas in detail.

Rice Cultivation: Up till the 1800’s. cotton cultivation was a major product in this state. The introduction of rice cultivation changed all this. W H Fuller, a hunter, accidentally discovered rice in the latter part of 1800 and introduced this crop to the state. The 1900’s saw a great development of this crop and it has been since then a major cash crop in Arkansas.

Cotton: The dark alluvial soil and climate of the Arkansas Delta is very conducive to cotton cultivation. The earliest record of cotton cultivation is in the 1800’s when the initial thrust in cotton cultivation began. An abundant supply of slave labor also aided the development of this crop. Cotton production today covers about 10% of that of the entire U.S.

Soybean: Soybean is actually a rotation crop. As it is a legume, it is grown to replenish the nitrogen the soil of rice and cotton fields. A German immigrant by the name of Jacob Hartz was responsible for the introduction of soybean to the Arkansas economy. Realizing the use of soybean for the purpose of nitrogen fixation for other crops, Hartz obtained soybean seeds from neighboring Illinois. Today the soybean industry is really big in Arkansas and includes, other than the beans themselves, soybean oil, oilcake, soy nuggets, soy milk and so on.

Poultry: Poultry farming was never taken seriously until the late 1800’s. Millard Berry promoted an incubator in 1893 and gave a boost to poultry farming in Arkansas. Poultry associations were formed and it the industry received a makeover. Several new techniques were introduced contributing to the modernization of the sector.

Timber: As this a major portion of Arkansas covered by forest, this business became a natural choice. Towards the end of the 20th century lumbering reached its peak but declined after 1920 with the introduction of reforestation and anti-lumbering campaigns due to increasing awareness by the public about the environment. The rapid development of railways in the 1900’s also created a mutual demand for the timber industries, as the railways needed timber for cross ties on the tracks and the timber industry benefited from the transport infrastructure that was created. Today timber remains a major revenue spinner for Arkansas.

Aquaculture: This is a more modern activity which was started in the 1940’s with the development of modern fish farms. Initially intended to produce goldfish, these were further diversified into different edible varieties, a major category being catfish. Aquaculture in Arkansas is not only restricted to fish but also other aquatic plants and animals. Arkansas is the second largest producer of aquaculture in the U.S.

Mining: Arkansas is a state rich in various minerals. In the early days mining products were used to develop the area. The earliest minerals extracted were salt, and saltpeter (used for making gunpowder) and coal. In the 1940s there was a major spurt in the mining activity in Arkansas and the Second World War was also a catalyst for this. Although Arkansas is considered as a farming state, it ranks about 25th in the mining sector in the U.S.

Oil and Gas: There is an abundant supply of natural gas and oil in this state. Most of it is located in the northwest. Oil exploration started in the late 1800s but it was not until 1920 that oil was successfully discovered. Over the next ten years, there was a boom in oil production and oil towns mushroomed all over the country. But it was not until 1939 with the formation to the Arkansas Oil and Gas Commission that this industry became regulated and properly developed. Today although oil and gas reserves have dwindled Arkansas still is a major contributor to oil and gas in the U.S.

Manufacturing:  The manufacturing industry started off as an offshoot of the agricultural and farming industry. Initially factories were set up to produce farm equipment but today this industry has diversified into several different products. Arkansas is very well developed in food products, furniture, automobile and aircraft parts.

Services: Last but not the least, the service industry cannot be ignored. Over the years as the economy developed, there was a need for different services to provide a proper infrastructure.  Thus governmental and non-governmental agencies began to spring up to service the telecommunications, transport, and health sectors.

Conclusion: So we can see that Arkansas is a state with a great deal of economic resources and is on par with other states of the U.S.

Arkansas Taxation

  ($000) Per Capita
Total Taxes 5,034,109 1,857.55
Property taxes 486,895 179.66
Sales and gross receipts 2,589,256 955.42
General sales and gross receipts 1,918,140 707.78
Selective sales taxes 671,116 247.64
Alcoholic beverage 30,739 11.34
Amusements (X) (X)
Insurance Premiums 80,386 29.66
Motor fuels 415,050 153.15
Pari-mutuels 4,032 1.49
Public utilities (X) (X)
Tobacco products 93,073 34.34
Other selective sales 47,836 17.65
Licenses 234,931 86.69
Alcoholic beverages 1,579 0.58
Amusements 1,924 0.71
Corporation 7,983 2.95


  ($000) Per Capita
Licenses 234,931 86.69
Hunting and fishing 21,294 7.86
Motor vehicle 97,453 35.96
Motor vehicle operators 13,205 4.87
Public utility 10,311 3.8
Occupation and business, NEC 76,838 28.35
Other 4,344 1.6
Other taxes 1,723,027 635.78
Individual income 1,488,250 549.15
Corporation net income 161,021 59.42
Death and gift 35,697 13.17
Documentary and stock transfer 19,086 7.04
Severance 13,217 4.88
Other 5,756 2.12

Arkansas Sales and Use Tax

Office Address Phone Fax
Sales and Use Tax Ledbetter Building
1816 W 7th, Ste 2350
Little Rock, AR 72201
501-682-7104 501-682-7904
Sales and Use Tax Mailing Address PO Box 1272
Little Rock, AR 72203