New Mexico was ranked by Forbes in the bottom six of U.S. state economies for productivity as of November 2017. The state's overall unemployment rate is approximately 6.4%, and the projected annual job growth rate is 0.7%. However, the New Mexico Economic Development Department, a statutorily created public-private organization that markets the state to entrepreneurs, points to seven industry areas where it believes New Mexico will make its mark.

Seven Industries Set to Boost New Mexico's Economy 

New Mexico has a competitive advantage when it comes to energy, landscape, sheer space, geographic location, logistics, R&D and manufacturing. These factors are encouraging businesses to relocate to New Mexico, and activity is increasing in the following key areas.

1. Energy

New Mexico is the eighth largest net energy supplier to the United States. Energy sources include oil and gas; solar and wind farms; geothermal, algae and biofuel production. The state's average of 320+ days a year of sunshine and its vast open spaces make it an ideal setting for solar and wind energy projects. In 2017, New Mexico added wind power capacity at a faster rate than any other state.

Companies in the oil and gas sector provide more than $2 billion in tax revenue for New Mexico annually, and New Mexico ranks third nationally in oil production.

The San Juan Basin, located in the Northwestern part of the state, is the single-largest proven natural gas reserve in the U.S. New Mexico's Southeast corner shares the Permian Basin region with Texas. The Permian Basin is one of the most important areas for the production of light sweet West Texas Intermediate crude oil in the country. Geologists estimate that the Permian Basin may have reserves for another 100 years.

New Mexico also has other abundant natural resources, for example, the state is first in U.S. potash production and third in U.S. copper production.

2. Aerospace and Defense

The state has an ideal climate for aerospace and defense projects together with testing facilities and restricted airspace. Spaceport America, an FAA-licensed spaceport located on 18,000 acres of State Trust Land, is a hub for industry players such as Virgin Galactic, UP Aerospace and Payload Specialties.

New Mexico is home to three U.S. Air Force bases: Kirtland, Cannon and Holloman. In addition, there is Fort Bliss, a U.S. Army proving ground, and the White Sands Missile Range, a missile test range that has served as the primary testing ground for U.S. missiles since the end of World War II. There are also large U.S. government research and development facilities that provide approximately one out of 10 jobs in New Mexico. These include Sandia National Laboratories and the Los Alamos National Laboratory, two of three facilities in the United States where classified nuclear weapons design work is conducted.

3. Tourism and Food 

New Mexico's culture is a popular draw for tourists, particularly its spicy, unique foods and products created from a growing food-processing industry. The state has competitive prices for electricity, land and wages, which encourages food and tourism companies and differentiates New Mexico from other more costly states for doing business.

The state Department of Tourism reported growth in tourism spending for the past six years. According to the report, travelers spent $6.4 billion in 2016, which was an increase of over 3% on the previous year.

4. Distribution, Logistics and Transportation

New Mexico's geographic location, climate and transportation infrastructure are all factors that appeal to businesses. The North American Borderplex near the Chihuahua, Texas, and New Mexico borders is an area of rapid growth with a vast comprehensive logistics and transportation network. Large manufacturers and some of North America’s largest military assets rely on labor and access to markets using the area's transportation infrastructure. The area has a binational, bilingual culture with over 2.4 million individuals and one of the world’s largest bilingual workforces.

5. Advanced Manufacturing

According to The New Mexico Partnership, a state-designated point of contact for businesses looking to locate in New Mexico,  the state has a low effective tax rate for manufacturers; the income tax rate for corporations is 5.9%. There is also a sizable workforce, and the state operates an extensive jobs package that benefits businesses and workers.

6. Digital Media and Film Production

New Mexico offers production companies a progressive tax credit incentive for computer-generated imagery services provided in New Mexico for film and multimedia projects. New Mexico has been a favored movie location shooting site since the earliest days of motion pictures, especially for westerns. According to the New Mexico Film Office, from 2014 to 2017, the amount of direct in-state production spending increased from $162 million to $506 million.

New Mexico's extensive research and development facilities have expanded the state's involvement in the film industry to include animation and graphics, other digital media production and post-production services. Among the many noteworthy movies filmed on location in New Mexico are The Grapes of Wrath, Superman, True Grit, Easy Rider and Silverado.

7. Administrative and Federal Government

Over one-third of New Mexico’s workers are employed in administrative support positions or sales. In addition, many U.S. companies are locating their customer service centers in New Mexico including The Gap, Hewlett-Packard, Fidelity Investments, Lowe’s and Alliance Data  Systems occupations.

The Federal government plays a major role in the economy of New Mexico and provides many of the state's largest employers, including Sandia National Laboratories, located in the Rio Grande Research Corridor. The Albuquerque research corridor is home to major U.S. government research facilities and a number of high-tech private industries such as Lockheed Martin Engineering and Science Company. Other major federal employers include the U.S. Bureau of Land Management, the National Park Service and the U.S. Citizenship and Immigration Service.