Category

Strengths (Internal Positive)

Weaknesses (Internal Negative)

Opportunities (External Positive)

Threats (External Negative)

Ease of Doing Business

Favorable Economic Outlook: Ranked in the Top 10 for overall economic outlook (2025 ALEC-Laffer Index) due to tax cuts and pro-growth policies.

Complex Tax Structure: Ranks 36th nationally on the 2025 State Tax Competitiveness Index. Notorious for having the 3rd highest combined state and local sales tax rate (9.46%).

Relocation Trend: Attracting companies (e.g., Amazon, Hytrol) due to low cost of living and lower operating costs compared to coastal states.

Neighbor Competition: Nearby states like Texas (#7) and Tennessee (#8) have significantly better tax competitiveness, diverting potential business investment.

Domestic Manufacturing

Key Economic Backbone: Manufacturing is a major sector in terms of GDP and employment, with high worker productivity in the Mid-America region.

Recent Decline in Activity: The regional Manufacturing Business Conditions Index has recently indicated flat or declining activity (sub-50.0 in September 2025).

Reshoring Initiative Focus: Highlighting manufacturing at events like the Arkansas Manufacturing Showcase to capture reshoring efforts from companies bringing production back to the US.

Supply Chain Volatility: Manufacturing is heavily exposed to the instability of global supply chains and higher costs from widespread US tariffs on imports.

Sustainability Initiatives

Growing Institutional Focus: Active Business Sustainability Summit (P4) and the Arkansas Environmental Federation (AEF) Energy & Sustainability Committee driving corporate adoption of sustainable practices.

Unclear State Policy Mandate: Sustainability efforts appear driven largely by private industry and academic initiatives rather than a single, high-profile statewide legislative mandate.

Agri-Tech/Food Processing Lead: Opportunity to become a national leader in sustainable food and poultry processing given its dominance in these industries (e.g., Tyson Foods).

Regulatory Headwinds: Potential for new federal environmental regulations to impose significant compliance costs on the state's large manufacturing and agricultural sectors.

Balance of Trade & Global Contribution

Trade Surplus Potential: In July 2025, the state posted a positive monthly trade balance of $34 million (Exports: $531M, Imports: $520M), aided by a greater decrease in imports.

Modest Overall Export Volume: Ranks relatively low, around 40th nationally, for total export value ($6.89B in 2024), indicating a smaller global footprint compared to larger states.

Emerging Trade Partners: Mexico has recently surpassed Canada as Arkansas's top trade partner, offering a valuable nearshoring and regional trade growth pathway.

US Tariff Backlash: State exports have shown a recent decline (down 7.1% through July 2025), which is linked to US tariffs negatively affecting exports and imports across the Mid-America region.