Hidalgo (state) - Economy

Economy

Traditionally, Hidalgo’s economy has been based on mining and agriculture, with manufacturing more recently. Most industry is located in what is called the “Urban Industrial Corridor of the South, where most of the state’s economic activity is located. Outside of this corridor, the economy remains based on subsistence farming and has high levels of poverty, with the per capita income only 61.5% of the national average. Industry accounts for more than 25% of the state’s gross domestic product.

However, the state has a higher-than-average growth, averaging 7.7% since the mid 1990s. The state consistently produces and overall surplus. Like other Mexican states, Hidalgo is heavily dependent on the federal government for revenues, with almost 97% of revenues from federal sources, which is high. The state's debt level is very low compared to other rated local and regional governments in Mexico and worldwide. One major debt issue is with pension funds but S&P does not consider it onerous. The state’s economic rating by Standard & Poor’s is ‘mxA-‘ with a stable outlook.

The state contains 2.1 million hectares of land, 30% of which is cultivable. Most of this land is only farmed during the annual rainy season. Corn is the primary crop followed by barley, beans, oats, wheat, green chili peppers, squash and tomatoes. Thirty eight percent of the land is dedicated to grazing and livestock production. Fishing and fish farming are also important producing mojarra, tilapia, carp, trout and charal. Most of the surface area of the state (38%) is used for the raising of livestock with 29% dedicated to agriculture. Forests cover about 22% of the state. Both pine and broadleaf forests are found in the higher mountain areas of the state. The lower altitude Huasteca has rainforest and semi-rainforest vegetation. Hidalgo has approximately 125,000 m3 of commercial timber with an estimated value of 47,771.701 pesos. Non-wood forest products are estimated to value 331,961 pesos. For much of the 20th century, forest size diminished. This is being countered with reforestation efforts over as much as 743,224 hectares, with about 2,500 hectares fully reforested every year. Just over 25% of the population if employed in agriculture and livestock production.

Mining is the oldest and most traditional large-scale economic activity in the state. The mining of magnesium provides the most income to the state, providing 28% of all revenues, followed by zinc (18%), silver (14.3%), limestone (12.9%) and lead (7.7%). Other minerals include gold, copper, cadmium and sulfur. Most precious metals such as gold, silver and copper are mined in Pachuca and Zimapan. Petroleum, natural gas and other similar deposits also exist.

The most important commercial sector of the state is that of retail foodstuffs, especially those selling groceries, meat and poultry. This represented over 40% of the commercial sector as of 1998. Just over 30% of commerce was dedicated to non-food products such as clothing and pharmaceuticals with the rest mostly dedicated to wholesale foods. From the latter 20th century, tourism has taken up much of the economic slack left behind by the demise of much of the state’s mining industry, with income from this sector surpassing that of the petroleum industry. The state has a variety of historic, cultural and natural attractions. Commerce and tourism employ about 44% of the population.

Industrial production in the state centers on metal products, machinery and equipment, accounting for about 24% of the total. Non-metallic minerals, other than petroleum account for about 25%. However, the most important industry is automobile and train engine production, which is followed by the refining of petroleum products, based mostly in Tula. Automotive and train production is centered in Ciudad Sahagún. Most of the automobiles produced are sold in Mexico City. Other industries include the production of cement in Tula de Allende and textiles in Tepeji del Río and Tulancingo. This employs about 30% of the population.

Construction accounts for about 4% of the economy of Hidalgo, with utilities such as electricity accounting for about the same. Hidalgo produces about 8.7% of the total electricity used in the country.

In many of the more rural parts of the state, the making of crafts such as textiles, baskets, wood items and more can contribute significantly to household income. Textile production is widespread, but some of the best embroidery is done in Tenango de Doria, in which blouses, skirts and more are covered in designs of bright colors. Another area with noted embroidery is Acaxochitlán and nearby communities in the Sierra de Huasteca. The designs on these pieces are endemic to the area. In the Mezquital Valley, they make items with maguey fiber, often for rope, belts, bags and sandals. The weaving of cotton and wool into items such as blankets, wraps and other items is also a widespread craft. Fibers from maguey plants and palm trees are also used in the production of baskets, hats and mats. One native hat made from palm fronds is called "garambullero" as well as a type of rattle. Other materials worked into baskets and other items include reeds, willow branches and ixtle. The working of all these fibres and materials is primarily done by women.

As the state has a relative abundance of wood, crafts based on this material is common. The most important product is the making of wood furniture, most of which is in a rustic Spanish style. Miniature boxes, flutes and other items are a speciality of a community called Nith in the Ixmiquuilpan municipality. Molango is noted for its guitars. Tenango is noted for the making of wooden utensils such as spoons and spatulas. Pottery production is categorized by the type of clay used. In the Tulancingo Valley, the clay type is known as "chapopote" and is mostly worked into pots, comals and other cooking items. Huejutla is known for its "barro blanco" (white clay), also used to make items for cooking. In Huasca de Ocampo red clay is abundant. In Chililico, the clay is ochre and typically painted with images of birds and flowers. The Mezquital Valley and the Comarca Minera area makes a type of pottery which is not glazed, mostly for utilitarian items. In some areas, such as Tulancingo and Chapantongo, Talavera type glazed pottery is also made. Metalworking comes from the state's mining past, where materials such as gold, silver, copper and iron are worked into jewelry, pots, jars, utensils, and railing. Areas best known for their metal working are Pachuca and Real del Monte (jewelry), The Sierra Alta and Tizapán (copper items) and the Mezquital Valley for ironwork.