The economy of the state of Indiana is reflected in its gross state product in 2017 of US$359 billion and per capita income of $44,165. A high percentage of Indiana's income is from manufacturing. Indiana has been the largest steel producing state in the U.S. since 1975, with the
Calumet Region
The Calumet Region is the geographic area drained by the Grand Calumet River and the Little Calumet River of northeastern Illinois and northwestern Indiana in the United States. It is part of the Great Lakes Basin, which eventually reaches the Atl ...
of
northwest Indiana
Northwest Indiana, nicknamed The Region after the Calumet Region, comprises Lake, Porter, LaPorte, Newton and Jasper counties in Indiana. This region neighbors Lake Michigan and is part of the Chicago metropolitan area. According to the 2020 Ce ...
being the largest single
steel
Steel is an alloy made up of iron with added carbon to improve its strength and fracture resistance compared to other forms of iron. Many other elements may be present or added. Stainless steels that are corrosion- and oxidation-resistant ty ...
producing area in the U.S., accounting for 27% of all U.S. steel production. Indiana is also the 2nd largest auto manufacturing state. Indiana's other manufactures include pharmaceuticals and medical devices, automobiles, electrical equipment, transportation equipment, chemical products, rubber,
petroleum
Petroleum, also known as crude oil, or simply oil, is a naturally occurring yellowish-black liquid mixture of mainly hydrocarbons, and is found in geological formations. The name ''petroleum'' covers both naturally occurring unprocessed crud ...
and
coal
Coal is a combustible black or brownish-black sedimentary rock, formed as rock strata called coal seams. Coal is mostly carbon with variable amounts of other elements, chiefly hydrogen, sulfur, oxygen, and nitrogen.
Coal is formed when dea ...
products, and factory machinery.
History
Indiana's earliest economy revolved around trade with the Native American tribes in the northern and central parts of the state, which were connected by rivers to the
Great Lakes
The Great Lakes, also called the Great Lakes of North America, are a series of large interconnected freshwater lakes in the mid-east region of North America that connect to the Atlantic Ocean via the Saint Lawrence River. There are five lakes ...
, and ultimately the
Atlantic
The Atlantic Ocean is the second-largest of the world's five oceans, with an area of about . It covers approximately 20% of Earth's surface and about 29% of its water surface area. It is known to separate the " Old World" of Africa, Europe an ...
. The state government established a trading monopoly with the tribes who became the primary purchasers of Indiana settler's goods. Although the basis was established in the
Northwest Ordinance
The Northwest Ordinance (formally An Ordinance for the Government of the Territory of the United States, North-West of the River Ohio and also known as the Ordinance of 1787), enacted July 13, 1787, was an organic act of the Congress of the Co ...
and well known, economic growth was slow to begin in the state, primarily due to the inability to ship goods to market affordably. After the
Mississippi River
The Mississippi River is the second-longest river and chief river of the second-largest drainage system in North America, second only to the Hudson Bay drainage system. From its traditional source of Lake Itasca in northern Minnesota, it f ...
was opened to American traffic following the
Louisiana Purchase
The Louisiana Purchase (french: Vente de la Louisiane, translation=Sale of Louisiana) was the acquisition of the territory of Louisiana by the United States from the French First Republic in 1803. In return for fifteen million dollars, or app ...
, agricultural grew rapidly in the state, but was still hampered by the lack of internal transportation in the state.
The
Indiana General Assembly
The Indiana General Assembly is the state legislature, or legislative branch, of the state of Indiana. It is a bicameral legislature that consists of a lower house, the Indiana House of Representatives, and an upper house, the Indiana Senate. ...
attempted to remedy the transportation system in the late 1810s, but was thwarted by the
Panic of 1819
The Panic of 1819 was the first widespread and durable financial crisis in the United States that slowed westward expansion in the Cotton Belt and was followed by a general collapse of the American economy that persisted through 1821. The Panic h ...
which caused the state's only two banks to collapse. A second attempt was launched in the early 1830s leading to the passage of the
Mammoth Internal Improvement Act
The Indiana Mammoth Internal Improvement Act was a law passed by the Indiana General Assembly and signed by Whig Governor Noah Noble in 1836 that greatly expanded the state's program of internal improvements. It added $10 million to spending and ...
. This state-funded development of canals, railroads and roads statewide resulted in a large rise in land and produce values, but it too was thwarted by the
Panic of 1837
The Panic of 1837 was a financial crisis in the United States that touched off a major depression, which lasted until the mid-1840s. Profits, prices, and wages went down, westward expansion was stalled, unemployment went up, and pessimism abound ...
; although this spending bankrupted the state, the foundation it provided allowed Indiana to grow into one of the leading farming states by the 1850s.
The 1860s and the
American Civil War
The American Civil War (April 12, 1861 – May 26, 1865; also known by other names) was a civil war in the United States. It was fought between the Union ("the North") and the Confederacy ("the South"), the latter formed by states th ...
led to the rapid completion of the state's railroad system and the growth of small industry. Building railroad cars and glass manufacturing became the state early leading industries, established primarily in the central parts of the state. Southern Indiana, however was adversely affected by the war and never regained its economic dominance in the state. Prior to the war, the largest cities were along the
Ohio River
The Ohio River is a long river in the United States. It is located at the boundary of the Midwestern and Southern United States, flowing southwesterly from western Pennsylvania to its mouth on the Mississippi River at the southern tip of Illino ...
and had a thriving trade with the south and large ship building centers that languished in the war. In most of the state, the war led to a rise in the value of farm produce and significantly raised the state's standards of living.
The
Indiana Gas Boom began in the 1880s and lasted through 1910, when large-scale drilling and production of natural gas took place in the
Trenton Gas Field
The Trenton Gas Field is located in east central Indiana and the most western portion of west central Ohio. The field was discovered in 1876, but the size and magnitude of the field was not known until the 1880s. The field was the largest natural g ...
of east-central Indiana. The
Ball Corporation
Ball Corporation is an American company headquartered in Broomfield, Colorado. It is best known for its early production of glass Mason jar, jars, lids, and related products used for home canning. Since its founding in Buffalo, New York, in 1880, ...
moved its headquarters from New York to
Muncie, Indiana
Muncie ( ) is an incorporated city and the county seat, seat of Delaware County, Indiana, Delaware County, Indiana. Previously known as Buckongahelas Town, named after the legendary Delaware Chief.http://www.delawarecountyhistory.org/history/docs ...
and built a glass factory to take advantage of the cheap natural gas, and became an icon of Muncie.
Indiana rapidly became a manufacturing powerhouse in the first 20 years of the 20th Century, as steel, oil refining, automobiles, railroad rolling stock, and consumer and industrial appliance companies established themselves, taking advantage of Indiana's central location, cheap and plentiful land, and the lower costs associated with smaller industrial cities. Enormous integrated steel mills were built in cities like East Chicago and Gary along the shore of Lake Michigan, with smaller mills built in cities like Muncie and Indianapolis. Railroads crisscrossed the state, the most iconinc being the
Monon Line.
Indiana, being a manufacturing and agricultural state, was utterly devastated by the
Great Depression
The Great Depression (19291939) was an economic shock that impacted most countries across the world. It was a period of economic depression that became evident after a major fall in stock prices in the United States. The economic contagio ...
in the 1930s. Unemployment exceeded 25% at the depths of the Depression in early 1933, with many coal-mining southern counties seeing unemployment rates exceed 50%. The Indiana Republican Party, which previously dominated the state and gave precedent to business interests, was destroyed in the elections of 1932, and the Indiana Democrats, led by newly-elected Governor
Paul V. McNutt
Paul Vories McNutt (July 19, 1891 – March 24, 1955) was an American diplomat and politician who served as the 34th governor of Indiana, high commissioner to the Philippines, administrator of the Federal Security Agency, chairman of the ...
, swept to power and radically transformed the state, implementing public works projects and completely overhauling the state government. Trade unions gained new strength during the 1935 - 1945 period, and peaked at 41% in 1964. Unions would be a potent political force in Indiana through the 1990s, with a unionization rate of 20% as recently as 1990.
However, Indiana's factories went into overdrive during
World War II
World War II or the Second World War, often abbreviated as WWII or WW2, was a world war that lasted from 1939 to 1945. It involved the vast majority of the world's countries—including all of the great powers—forming two opposin ...
to support the war effort, and mass employment and prosperity returned. Indiana manufactured 4.5 percent of total United States military armaments produced during World War II, ranking eighth among the 48 states.
During the post-World War II boom from 1945 to 1973, Indiana's economy prospered and Indiana was ranked 20th out of 50 states plus Washington, D.C. in the late-1960s for personal income. However, Indiana's economy began to struggle after the
recession of 1969-1970 as the manufacturing sector began to decline. Foreign competition, corporate mergers, automation, and new management strategies lead to downsizing, mass layoffs, diversification, and chronic unemployment. Cities such as Muncie, Anderson, Indianapolis, Kokomo, Gary, East Chicago, Hammond, Michigan City, Fort Wayne, South Bend, Elkhart, and Evansville all witnessed population declines and rising unemployment and poverty during the 1970s and 1980s.
Northwest Indiana
Northwest Indiana, nicknamed The Region after the Calumet Region, comprises Lake, Porter, LaPorte, Newton and Jasper counties in Indiana. This region neighbors Lake Michigan and is part of the Chicago metropolitan area. According to the 2020 Ce ...
was hit especially by the
steel crisis
The steel crisis was a recession in the global steel market during the 1973–75 recession and early 1980s recession following the post–World War II economic expansion and the 1973 oil crisis, further compounded by the 1979 oil crisis, and last ...
of 1974 - 1983.
Since the early-1990s, Indiana has diversified its economy away from heavy industry and towards service (such as banking, insurance, healthcare, education, financial services, information technology) and high-tech manufacturing. In 2016, 516,000 workers were employed in manufacturing, down from 696,000 in 2000 and nearly 750,000 in 1969, but up from 424,000 in 2009 at the depths of the
Great Recession
The Great Recession was a period of marked general decline, i.e. a recession, observed in national economies globally that occurred from late 2007 into 2009. The scale and timing of the recession varied from country to country (see map). At ...
. Heavy industries such as oil, autos, and steel still compromise a significant portion of the states' GDP, but other industries such as electrical goods, medical equipment, and pharmaceuticals have grown recently as well. However, Indiana's wage growth has lagged behind other states, and Indiana has fallen from 20th in personal income during the 1960s to 39th in 2017.
Fiscal policy
Sectors
Energy
Oil, natural gas, and coal
Renewable
=Hydro
=
Indiana has six hydroelectric dams. The Norway and Oakdale Dams near Monticello provide electrical power, recreation, and other benefits to local citizens. The Norway Dam created Lake Shafer and the Oakdale Dam created Lake Freeman. The
Markland Dam
The Markland Locks and Dam is a concrete dam bridge and locks that span the Ohio River. It is 1395 feet (425.2 m) long, and connects Gallatin County, Kentucky, and Switzerland County, Indiana.
The locks and dam were reviewed by the Board of Engi ...
, on the Ohio River, near Vevay, Indiana also produces electricity. The city of Wabash was the first electrically lighted city in the country.
=Biofuels
=
Indiana is becoming a leading state in the production of
biofuels
Biofuel is a fuel that is produced over a short time span from biomass, rather than by the very slow natural processes involved in the formation of fossil fuels, such as oil. According to the United States Energy Information Administration (E ...
, such as
ethanol
Ethanol (abbr. EtOH; also called ethyl alcohol, grain alcohol, drinking alcohol, or simply alcohol) is an organic compound. It is an Alcohol (chemistry), alcohol with the chemical formula . Its formula can be also written as or (an ethyl ...
and
biodiesel
Biodiesel is a form of diesel fuel derived from plants or animals and consisting of long-chain fatty acid esters. It is typically made by chemically reacting lipids such as animal fat (tallow), soybean oil, or some other vegetable oil with ...
. Indiana now has 12 ethanol and 4 biodiesel plants located in the state.
Reynolds Reynolds may refer to:
Places Australia
*Hundred of Reynolds, a cadastral unit in South Australia
*Hundred of Reynolds (Northern Territory), a cadastral unit in the Northern Territory of Australia
United States
* Reynolds, Mendocino County, Calif ...
, located north of
Lafayette
Lafayette or La Fayette may refer to:
People
* Lafayette (name), a list of people with the surname Lafayette or La Fayette or the given name Lafayette
* House of La Fayette, a French noble family
** Gilbert du Motier, Marquis de Lafayette (1757â ...
is now known as BioTown, USA. The town is experimenting with using biofuels and organic fuels, such as those made with manure, to power the town.
=Solar
=
A 17.5MW plant built at the Indianapolis airport in 2013 was the largest airport solar farm in the U.S.
=Wind
=
Commercial wind power in Indiana began in 2008 when the
Benton County Wind Farm
The Benton County Wind Farm (also called Goodland I) consists of 87 model sl/sle Gen4 GE 1.5 MW wind turbines near Earl Park, Indiana in northern Benton County, Indiana. The farm's nameplate capacity is 130.5 MW. The farm was developed by Orion ...
came online. New estimates of wind resources in 2006 raised the potential wind power capacity for Indiana from 30 MW at 50 m turbine hub height to 40,000 MW at 70 m, which could double at 100 m, the height of newer turbines. At the end of June, 2008, Indiana had installed 130 MW of wind turbines and had under construction another 400 MW. , Indiana had a total of 1035.95 MW of wind power
nameplate capacity
Nameplate capacity, also known as the rated capacity, nominal capacity, installed capacity, or maximum effect, is the intended full-load sustained output of a facility such as a power station, installed,
with more under construction or in planning.
=Geothermal
=
Indiana has no geothermal electrical power generation facility. The Indiana Geological Survey was conducting a study to catalogue all potentially exploitable sources of geothermal heat in the state.
In 2010, the Indiana Heating and Air-Conditioning Incentive Program (IHIP) provides rebates of up to $1000 for the purchase and installation of Energy Star-rated
geothermal heat pump
A ground source heat pump (also geothermal heat pump) is a heating/cooling system for buildings that uses a type of heat pump to transfer heat to or from the ground, taking advantage of the relative constancy of temperatures of the earth through ...
s.
One of the largest geothermal heat pump systems in the United States is a GeoExchange pond coupled loop system by Geothermal Design Associates at the St. Joseph Medical Center in
Fort Wayne
Fort Wayne is a city in and the county seat of Allen County, Indiana, United States. Located in northeastern Indiana, the city is west of the Ohio border and south of the Michigan border. The city's population was 263,886 as of the 2020 Censu ...
.
Agriculture
Indiana is the eighth largest agricultural exporter in the nation, exporting just over $4.6 billion in 2017. Indiana is the tenth largest farming state in the nation.
Top 5 commodities (by value of sales)
Corn: $3.28 billion
Soybeans: $3.08 billion
Meat animals: $1.62 billion
Poultry and eggs: $1.18 billion
Dairy: $750 million
Pharmaceuticals & medical devices
Indiana is home to the international headquarters of pharmaceutical manufacturer
Eli Lilly
Eli Lilly (July 8, 1838 – June 6, 1898) was an American soldier, pharmacist, chemist, and businessman who founded the Eli Lilly and Company pharmaceutical corporation. Lilly enlisted in the Union Army during the American Civil War and r ...
in Indianapolis, the state's largest corporation. Evansville is home to Mead Johnson Nutritionals, a subsidiary of
Bristol-Myers Squibb
The Bristol Myers Squibb Company (BMS) is an American multinational pharmaceutical company. Headquartered in New York City, BMS is one of the world's largest pharmaceutical companies and consistently ranks on the ''Fortune'' 500 list of the lar ...
, another large producer.
Elkhart has also had a strong economic base of pharmaceuticals, though it has decreased over with the closure of Whitehall Laboratories in the 1990s and of the large
Bayer
Bayer AG (, commonly pronounced ; ) is a German multinational corporation, multinational pharmaceutical and biotechnology company and one of the largest pharmaceutical companies in the world. Headquartered in Leverkusen, Bayer's areas of busi ...
complex, announced in late 2005. Overall, Indiana ranks fifth among all U.S. states in total sales and shipments of pharmaceutical products and second highest in the number of biopharmaceutical related jobs. Warsaw is dubbed the "Orthopedic Capital of the World"; the Warsaw region is home to nearly one-third of the $38 billion global orthopaedic industry including
Zimmer,
Biomet
Biomet, Inc., was a medical device manufacturer located in the Warsaw, Indiana, business cluster. The company specialized in reconstructive products for orthopedic surgery, neurosurgery, craniomaxillofacial surgery and operating room supplies. In ...
and
DePuy
DePuy Synthes () is a franchise of orthopaedic and neurosurgery companies. Acquired by Johnson & Johnson in 1998, its companies form part of the Johnson & Johnson Medical Devices group. DePuy develops and markets products under the Codman, DePuy ...
. Other medical device companies include
Roche
F. Hoffmann-La Roche AG, commonly known as Roche, is a Swiss multinational healthcare company that operates worldwide under two divisions: Pharmaceuticals and Diagnostics. Its holding company, Roche Holding AG, has shares listed on the SIX S ...
Diagnostics in Indianapolis, and
Cook
Cook or The Cook may refer to:
Food preparation
* Cooking, the preparation of food
* Cook (domestic worker), a household staff member who prepares food
* Cook (professional), an individual who prepares food for consumption in the food industry
* ...
in Bloomington.
Automotive
In 2013, Indiana's automobile industry rose to 2nd place in the country, behind Michigan, in terms of automotive gross domestic product.
Mining
In mining, Indiana is probably best known for its decorative
limestone
Limestone ( calcium carbonate ) is a type of carbonate sedimentary rock which is the main source of the material lime. It is composed mostly of the minerals calcite and aragonite, which are different crystal forms of . Limestone forms whe ...
from the southern, hilly portion of the state, especially from
Lawrence County. One of the many public buildings faced with this stone is
The Pentagon
The Pentagon is the headquarters building of the United States Department of Defense. It was constructed on an accelerated schedule during World War II. As a symbol of the U.S. military, the phrase ''The Pentagon'' is often used as a metony ...
, and after the
September 11, 2001, attacks
The September 11 attacks, commonly known as 9/11, were four coordinated suicide terrorist attacks carried out by al-Qaeda against the United States on Tuesday, September 11, 2001. That morning, nineteen terrorists hijacked four commerc ...
, a special effort was made by the mining industry of Indiana to replace those damaged walls with as nearly identical type and cut of material as the original facing.
Pentagon Renovation Program
There are also large coal mines in the southern portion of the state. Like most Great Lakes states, Indiana has small to medium operating petroleum
Petroleum, also known as crude oil, or simply oil, is a naturally occurring yellowish-black liquid mixture of mainly hydrocarbons, and is found in geological formations. The name ''petroleum'' covers both naturally occurring unprocessed crud ...
fields; the principal location of these today is in Southwestern Indiana
Southwestern Indiana is an 11-county region of southern Indiana, United States located at the southernmost and westernmost part of the state. As of the 2010 census, the region's combined population is 474,251. Evansville, Indiana's third-largest ...
, though operational oil derricks can be seen on the outskirts of Terre Haute.
See also
*List of U.S. states by GDP (nominal)
This is a list of U.S. states and territories by Gross Domestic Product (GDP). This article presents the 50 U.S. states and the District of Columbia and their nominal GDP at current prices.
The data source for the list is the Bureau of Econo ...
* Great Lakes Megalopolis
Notes
References
*
External links
Indiana Chamber of Commerce
{{DEFAULTSORT:Economy Of Indiana