North Carolina's economy was dominated by agriculture until the closing decades of the 19th century, with tobacco the major cash crop; today, tobacco is still the central factor in the economy of the coastal plain. In the piedmont, industrialization accelerated after 1880 when falling crop prices made farming less attractive. During the "cotton mill crusade" of the late 19th and early 20th centuries, local capitalists put spinning or weaving mills on swift streams throughout the region, until nearly every hamlet had its own factory. Under the leadership of James B. Duke, the American Tobacco Co. (now American Brands, with headquarters in New York City) expanded from its Durham headquarters during this same period to control, for a time, virtually the entire US market for smoking products. After native businessmen had established a successful textile boom, New England firms moved south in an effort to cut costs, and the piedmont became a center of southern industrial development.
As more and more Tar Heels left agriculture for the factory, their per capita income rose from 47% of the national average in 1930 to slightly less than 100% of the national average in 2000. The biggest employers are the textile and furniture industries. State government has made a vigorous effort to recruit outside investment and to improve the state's industrial mix. Major new firms now produce electrical equipment, processed foods, technical instruments, fabricated metals, plastics, and chemicals. The greatest industrial growth, however, has come not from wholly new industries but from fields related to industries that were firmly established. Apparel manufacture spread across eastern North Carolina during as an obvious extension of the textile industry, and other new firms produce chemicals and machinery for the textile and furniture business. Manufacturing remains the dominant sector in the state's economy, peaking at an output of nearly $62 billion (23.8% of total output) in 1999, as the overall state economy grew at a rate of 8.8% in 1998 and 8% in 1999. A decline in manufacturing output of 4.9% by 2001 was accompanied by declining overall growth rates, of 4.7% in 2000, and 0.98% in the national recession of 2001. While the nation's unemployment rose 1.4 percentage points between the third quarter 1999 and third quarter 2002, the rise in North Carolina over this period was 6.4%, reflecting mainly layoffs in its manufacturing sector.
North Carolina's gross state product in 2001 was $275.6 billion, twelfth among the states, to which manufacturing contributed $53.9 billion; financial services, $52.3 billion; general services, $48 billion; trade, $41.9 billion; government, $35.9 billion; transportation and public utilities, $18.8 billion, and construction, $14.1 billion. The public sector in 2001 constituted 13% of gross state product.