Between the Civil War and World War II, Mississippi's economy remained poor, stagnant, and highly dependent on the market for cotton—a bitter legacy from which the state is only now beginning to recover. As in the pre–Civil War years, Mississippi exports mainly raw materials and imports mainly manufactures. In the 1930s, state leaders began to realize the necessity of diversifying the economy. By the mid-1960s, many more Mississippians recognized that political and economic inequality and racial conflict did not provide an environment attractive to the industries the state needed.
Once the turmoil of the 1950s and early 1960s had subsided, the impressive industrial growth of the immediate postwar years resumed. By the mid-1960s, manufacturing—attracted to the state, in part, because of low wage rates and a weak labor movement—surpassed farming as a source of jobs. During the following decade, the balance of industrial growth changed somewhat. The relatively low-paying garment, textile, and wood-products industries, based on cotton and timber, grew less rapidly in both value added and employment than a number of heavy industries, including transportation equipment and electric and electronic goods. The debut of casino gambling in the state in 1992 stimulated Mississippi's economy in the early and mid-1990s, and by 2002 accounted for 2.7% of total state employment (close to 31,000). In early 1995, however, the manufacturing sector began losing jobs, contributing to a deceleration in annual growth rates in the late 1990s, from 5% in 1998 to 4.1% in 1999 to 3% in 2000 to 1.5% in the national recession of 2001. Total employment began falling from the third quarter of 2000, and did not show any increase until the fourth quarter of 2002, with an uptick of 0.2%. Losses in the manufacturing sector created stress in other sectors, particularly in the retail trade and transportation and public utilities sectors. Areas of moderate growth in 2002 were business services and government. The number of personal bankruptcies in the state set a record in 2002, but the growth rate in filings moderated to 1.2%, down from 19.5% in 2001. The opening of a $1.4 billion Nissan plant near Jackson, scheduled for mid-2003 and projected to hire between 4,000 and 5,300 workers, should give the economy a boost. Southern Mississippi, where the Ship System division of Northrop Grumman, Keesler Air Force Base, and the Stennis Space Center are located, should also benefit from increased national defense spending. In 2001, the public sector accounted for 17.2% of the state gross product, the 6th-highest percent among the states.
Mississippi's gross state product in 2001 was $188.1 billion, the 35th largest among the states, to which general services and manufacturing each contributed about $12 billion; government, $11.5 billion; wholesale and retail trade, $11.2 billion; financial services, $8.2 billion; transportation and public utilities, $6.4 billion, and construction, $3.1 billion. From 1997 to 2001, the government sector grew 25.9% and general services 21%, while the level of manufacturing output fell –4.5%.