According to the Mexican government agency Conapo (National Population Council), Oaxaca is the third most economically marginalized states in Mexico. The state has 3.3% of the population but produces only 1.5% of the GNP. The main reason for this is the lack of infrastructure and education, especially in the interior of the state outside of the capital. Eighty percent of the state's municipalities do not meet federal minimums for housing and education. Most development projects are planned for the capital and the surrounding area. Little has been planned for the very rural areas and the state lacks the resources to implement them. The largest sector of Oaxaca's economy is agriculture, mostly done communally in ejidos or similar arrangements. About 31% of the population is employed in agriculture, about 50% in commerce and services and 22% in industry. The commerce sector dominates the gross domestic product at 65.4%, followed by industry/mining at 18.9% and agriculture at 15.7%.
In May 2010, Standard & Poor's raised the rating of the state from ‘mxBBB+’ to ‘mxA-’ with a stable outlook. Much of the reason for this is the better administration of public funds and better balanced budgets despite cutbacks in federal subsidies. This improvement in public finances has been occurring over the five or so years. The major draw on the state's credit is the lack of economic development.
Migration Poverty and migration are caused mostly by the lack of economic development in the state, which leaves most of the population working in the least productive sector. This has led to wide scale migration, mostly from the rural areas, to find employment. Within Oaxaca, many people leave rural villages to work in the city of Oaxaca, the Papaloapan area and the coast. Within Mexico, many leave for Mexico City, Mexico State, Sinaloa, Baja California and Baja California Sur. Most of those leaving the state are agricultural workers. As of 2005, over 80,000 people from Oaxaca state live in some other part of Mexico. Most of those leaving Oaxaca and Mexico go to the United States. Much of the current wave of emigration began in the late 1970s, and by the 1980s Oaxaca ranked 8th in the number of people leaving for the US from Mexico. Today, that percentage has fallen to 20th. Most of those who go to the United States concentrate in California and Illinois.
In 45.5% of Oaxaca's municipalities, the population has declined due to migration. Most of these are municipalities with less than 15,000 inhabitants and mostly indigenous. These municipalities are mostly located in the Sierra Norte, La Mixteca and the Central Valleys regions, with many heading to the United States. Those emigrating from the La Cañada, Isthmus and Papaloapan areas generally stay within Mexico.
Agriculture and natural resources
The economy is based on agriculture, especially in the interior of the state. Only 9% of the territory is suitable for agriculture due to the mountainous terrain, so there are limits to this sector. The production of basics, such as corn and beans, is mostly for auto consumption, but this production cannot meet demand.
The total agricultural production of the state was estimated at 13.4 million tons with a value of 10,528 million pesos in 2007. As of 2000, 1,207,738 hectares are used for the raising of crops, most of which occurs during the annual rainy season, with only 487,963 having crops growing year round. Only 81,197 hectares have irrigation. The variation of climate allows for a wider range of agricultural crops than would otherwise. Oaxaca is the nation's second highest producer of grains and agave. It is third in the production of peanuts, mango and sugar cane. It is the second largest producer of goat meat, providing about 10% of the national total. In the more temperate areas crops such as corn, beans, sorghum, peanuts, alfalfa and wheat are grown. In more tropical areas, crops also include coffee, sesame seed, rice, sugar cane and pineapple.
Livestock is raised on 3,050,106 hectares or 32% of the state's land. Cattle dominate in the Tuxtepec, Isthmus and Coast regions, with pigs dominating in higher elevations such as the Central Valleys Region. Other animals include sheep, goats, domestic fowl and bees. The Value of this production was estimated at 2,726.4 million pesos with cattle comprising over half of this.
Coffee is grown in mountain areas near the Pacific Ocean in municipalities such as Santa María Huatulco, Pluma Hidalgo, Candelaria Loxicha, San Miguel del Puerto and San Mateo Piñas. The growing of coffee here dates back to the 17th and 18th centuries when English pirates introduced the plant. Later, German immigrants ran coffee plantations but were forced to abandon them during the Second World War. Today, most coffee producers are organic and environmentally friendly, using traditional methods. Some of the best known farms include La Gloria, San Miguel del Puerto, Margaritas and El Pacifico, with the last two open to ecotourism.
Coastal fishing is an industry which still has room for development. The state has 510 km of coastline, 155,000 hectares of lagoons and estuaries. In addition there are 80 inland bodies of water. Species which are fished and/or farmed include shrimp, mojarra, huachinango and shark. In 2007, the total catch is estimated at 9,300 tons with a value of over 174 million pesos.
Forests cover approximately 6.3 million hectares. 5 million of these belong to various ejido and other communal organizations. Only a total of 164,759 hectares have official clearance for logging; however, unofficial and illegal logging is commonplace.
Mining and industry Mining has traditionally been important to the economy and history. Hernán Cortés sought and received the title of the Marquis of the Valley of Oaxaca in order to claim mineral and other rights. Currently coal, salt, chalk, petroleum, marble, lime, graphite, titanium, silver, gold and lead are still extracted. Most mines today are located in Etla, Ixtlán, San Pedro Taviche, Pápalo and Salinas Cruz. There is an oil and natural gas refinery in Salinas Cruz, which provides products to the state and other areas on Mexico's Pacific coast.
Women in the economy of Oaxaca The state of Oaxaca has the highest rate (80 percent), in all of Mexico, of workers in the informal sector.Howell, Jayne (2017). "'The Dirt Came Up': Domestic Service and Women's Agency in Oaxaca City, Mexico". City and Society (3 ed.). 29: 393–412. Even though only 33 percent of women participate in the labor sector and almost one out of four women work unpaid jobs, the women in Oaxaca take on a variety of jobs in the formal and informal workforce sectors.Cunningham, Wendy; Cos-Montiel, Francisco (2001). "Las encrucijadas del género y la cultura: impedimentos para el desarrollo económico en Oaxaca, Chiapas y Guerrero".
The shortage of opportunities in the formal labor market for women in Oaxaca is attributed to not only gender discrimination and their responsibilities within the home, but also geographical dispersion, and lack of market education. For indigenous women, the barriers are even higher as high rates of illiteracy and language barriers (Zapotec rather than Spanish) bar them from the job market.
Informal economy Women in Oaxaca have worked on the margins of the economy for centuries. Women often see their jobs as an extension of their household activities. These include jobs such as working on milpas (fields), huertas (kitchen gardens), or textile work.Rees, Martha Woodson (January 2006). ¿Ayuda or Work? Labor History of Female Heads of Household from Oaxaca, Mexico. University of Cincinnati: Research Gate. pp. 1–21. Notably, Oaxaca has accounted for more women in the informal economy than any other state in Mexico.Willis, Katie (January 1993). "Women's Work and Social Network Use in Oaxaca City, Mexico". Society for Latin American Studies. 12: 65–82. Many men and women discount women's jobs because the tasks do not fit the typical perception of a job. Women, especially Zapotec women, have a history of working in agriculture. In the 1950s women took over agriculture as many of the men migrated to the United States for the bracero temporary work program. And yet, 70 percent of women working in agriculture in Oaxaca earned nothing for their efforts.Cohen, Jeffery H.; Everett, Brooke; Polsky, Analise; Montiel-Ishino, Francisco (2009). "Gender, Work, and Opportunity in Oaxaca: Some Thoughts on the Importance of Women in the Economic Life of the Rural Village". Economic Development, Integration, and Morality in Asia and the Americas: 147–161.
Women in Oaxaca often earn wages through domestic labor, the sale of food and artisanal products, or the production of goods. As of 2010, over 60,000 women in Oaxaca produce an income through domestic labor. This number has gone up from 40,000 in 1990, due to wealth stratification. Women continue to face barriers even in the artisan market where men are offered higher prices for their goods. A study shows that men were often offered over 75 percent more for their products than women.Toledo, Arcelia; de la Paz Hernández, José; Griffin, Denis (2009). "Incentives and the growth of Oaxacan subsistence businesses". Journal of Business Research: 600–638.
Women have pushed back to the barriers presented in the Oaxaca economy. Some women have decided to join weaving, textile, and artisan cooperatives with strategic aims to undermine monopolies sustained by U.S. imports and local merchants.Lynn, Stephen (2006). "Women's Weaving Cooperatives in Oaxaca: An Indigenous Response to Neoliberalism". Critique of Anthropology: 253–278. Involvement in such cooperatives has fostered opportunities for women to work collectively to market their goods to customers.
Migration The geographic stratification of the rural areas in Oaxaca leads many women to migrate to the capital city in search of formal and informal jobs. Informal jobs often include: taxi cab driving, tour guiding and domestic service. Jobs in the formal economy include positions in restaurants hotels, and stores. These jobs are in great demand in the capital city which is home to the third highest degree of wealth inequality in all of Mexico. The capital city does offer opportunities for women involved in entrepreneurial activities such as selling good and services to tourists. This market, however, is highly unstable during seasons of low tourist numbers.Ferguson, Lucy (March 2011). "Promoting gender equality and empowering women? Tourism and the third Millennium Development Goal". Current Issues in Tourism (3 ed.). 14: 235–249, Taylor and Francis. Andrew Jacksom
Commerce and tourism The commerce sector divides into outlets designed to serve local needs and those associated with tourism. In 2007, there were 1,927 small grocery stores, 70 tianguis and 167 municipal markets. Tourism accounts for about 30% of the commerce sector of Oaxaca's economy. The state attracts visitors from both Mexico and abroad.
The capital city Oaxaca de Juarez, is a major center for this tourism. The historic center within the city is the second largest (ranking behind Mexico City) in the entire country of Mexico. The historical center of the city accounts for 61 percent of the city economy. This also produces a floating population of around 20,000 people who gravitate towards the historic center for business purposes daily.
Tourism is important to the state as it is the only sector that is growing and brings substantial income from outside the state. Most is concentrated in the capital with some along the coast as well. The state government has been pushing this sector heavily as a means of growing the economy, with major infrastructure projects such as the Oaxaca-Puerto Escondido-Huatulco highway (scheduled to finish in 2012) and the Iberdrola hydroelectric dam.