The events in Los Angeles, California, USA, have attracted much attention, especially with the deployment of members of the National Guard and the violent protests triggered by President Trump’s immigration policies, which may also reveal the separatist tendencies that have emerged in the state from time to time.
According to the California Governor’s official website, Governor Gavin Newsom announced that California has officially surpassed Japan and become the world’s fourth largest economy, according to the latest data released by the International Monetary Fund and the U.S. Bureau of Economic Analysis.
California’s nominal GDP will reach $4.1 trillion in 2024, equivalent to 14% of the total U.S. economy. California thus surpassed Japan, which has a GDP of $4.02 trillion, to rank fourth in the world, after the United States, China and Germany.
California plays a pivotal role in driving U.S. economic growth and contributes more than $83 billion to the federal government, surpassing the federal grants it receives. California is the largest agricultural producing region in the United States and an important center for industrial production, information technology, tourism, entertainment, and services.
The latest estimates show that California has a population of more than 40 million, making it the most populous state in the United States, with a total population of more than 341 million. Immigrants in the state make up about 28% of the total population.
Al Jazeera will explore the main pillars of California’s economy in this report.
California’s main pillars
1- Technology: $1 trillion
The tech industry is one of the main pillars of California’s economy and a major driver of its economic growth and development. The industry employs approximately 1.88 million people and directly contributes nearly $623.4 billion to the state’s GDP, equivalent to 19% of the state’s economy.
However, the real influence of the tech industry goes far beyond that. If you count its indirect impact on other industries and economic activity, its contribution will be close to $1 trillion, equivalent to 30% of the state’s total economy.
According to a report released by the California Business and Education Foundation (CFCE), the technology industry not only boosts local production and income growth, but also creates high-paying jobs in the state, supporting more than 4.2 million jobs, accounting for nearly 20% of California’s total employment.
According to the California Chamber of Commerce, the industry significantly increases tax revenue through interactions between businesses and the consumer spending generated by their employees, making it an integral pillar of California’s economy for the future.
Silicon Valley: More than 70 multinational companies
According to “builtinSF”, Silicon Valley straddles the southern part of the San Francisco Bay Area and is the center of the world’s largest technology companies, with more than 70 multinational companies, including Apple, Google, Meta, Cisco, Intel, Nvidia, Tesla and so on.
These companies are known for their innovation within the areas of personal computers, internet search, social media, cloud computing, artificial intelligence, software and semiconductors, robotics, and many other products and pillars of the Fifth Industrial Revolution.
2- Trade: $675 billion
California’s major ports, such as the Ports of Los Angeles and San Diego, serve as vital gateways for international trade, connecting California to global markets and facilitating the flow of goods along the coast. California’s trade volume is among the highest in the United States, making it the largest importer and second largest exporter in the United States.
According to data provided by the California Public Policy Institute, California’s total merchandise trade will reach $675 billion in 2024, accounting for about 16% of the state’s GDP, reflecting the important role trade plays in supporting California’s economy.
California imports 2.7 times more than exports, reflecting the purchasing power of the state’s market.
Manufactured goods dominate California’s exports, accounting for 87% ($159 billion), of which computer equipment, semiconductors, home appliances, and aerospace products and components are the main products of manufacturing exports.
Manufactured goods also dominate the state’s imports (89%, or $436 billion). Automobiles, computers, semiconductors, other electronic components, and telecommunications equipment account for one-third of total manufacturing imports, while oil and gas are the state’s fifth-largest imports ($26 billion), accounting for 5.3% of total imports.
Mexico, Canada and China together account for 37% of California’s exports and 41% of imports. According to previous data, in 2024, California exported $65 billion worth of industrial and agricultural products to these countries, while importing $187 billion worth of industrial products from these countries.
3- Real estate and finance: $491 billion
In 2024, the finance, insurance, real estate, leasing, and financial leasing industries contributed significantly to California’s economy, contributing approximately $491.4 billion to GDP.
According to the U.S. Facts platform, the real estate and rental industries alone generate $446.3 billion in revenue for the state, while the finance and insurance industries generate $446.3 billion. According to Statista, the industry generated $45.1 billion in revenue in the same year. These data reflect the critical role these industries play in underpinning California’s economic structure, stimulating finance and the real estate market.
4- Industrial: $397 billion
California is the largest manufacturing state in the United States, with 24,304 manufacturing companies and 1.5 million employees. According to Rogerson Business Services, this thriving industry encompasses various industries, including high-tech manufacturing, aerospace, food processing, industrial machinery, and medical devices.
SMEs are the backbone of California’s manufacturing industry, with 64% of manufacturers employing 25 or fewer, demonstrating the entrepreneurial spirit that drives innovation in the state.
According to the California Governor’s Office of Business and Economic Development, in 2023, the industry generated approximately $397 billion in GDP, accounting for approximately 11% of the economy.
5- Tourism: $157 billion
California’s tourism industry is expected to grow significantly in 2024, with total tourism spending reaching $157.3 billion, a 3% increase from $152.7 billion in 2023. This growth has boosted a strong labor market, with approximately 24,000 additional tourism-related jobs set to bring the total number of jobs supported by the industry to approximately 1.2 million, an increase of 2.1% from the previous year, according to the Visit California platform.
State and local tax revenues from tourism activities also increased by 3.1% to $12.6 billion in 2023 from $12.3 billion.
According to the above data sources, accommodation and food services became the largest expenditure category, with accommodation spending reaching US$34.7 billion, an increase of 2.4%; Spending on food services reached $36.8 billion, an increase of 5.3%, the highest among all categories.
6- Arts and entertainment: $64 billion
California’s entertainment and arts industries, particularly Los Angeles, home to Hollywood, are one of the state’s most important economic pillars. The industry generates billions of dollars in revenue annually and provides hundreds of thousands of jobs, making it a major contributor to California’s GDP.
The industry’s impact extends beyond employment and income to include its active role in shaping cultural narratives and enhancing California’s media and economic profile at both the national and global levels.
According to the Federal Reserve’s Department of Economic Development (FRED), the arts, entertainment, and leisure industry generated more than $64 billion in revenue last year, reflecting the critical role the industry plays in driving economic growth and establishing California as a global hub for the entertainment industry.
7- Agriculture: $59 billion
California leads the United States in agricultural production, especially fruits, vegetables, and nuts. The state produces more than one-third of all vegetables and more than three-quarters of fruits and nuts in the United States.
The Central Valley is one of the most productive agricultural regions in the world due to its fertile soil and suitable climate. According to California agricultural production statistics, California’s agricultural cash income reached about $59.4 billion the year before.
These statistics suggest that agriculture and its associated industries contribute nearly 3% of California’s GDP, reflecting its extensive and ongoing impact on the state’s economic structure.
What would happen if California declared independence?
The idea of California’s secession from the United States, advocated by the California Independence Movement (Calexit), is attracting increasing attention, especially amid political tensions between California and the U.S. federal government.
According to previous reports by the BBC, a new round of similar calls has emerged in recent years, as more and more people believe that California, with its rich resources and strong economy, may be able to manage its own affairs more effectively and independently than the Commonwealth.
Proponents of the idea cite California’s economic strength – its GDP is about $4.1 trillion. Pro-independence advocates also point to the state’s large population of more than 39 million, abundant natural resources, and strong technological prowess, all of which make it a successful independent country.
Despite popular support in some respects, legal realities pose a significant obstacle to this goal. The U.S. Constitution does not allow any state to unilaterally secede from the Union, and the Supreme Court previously ruled that the Union is indivisible in Texas v. White in 1868. Therefore, any legitimate attempt at independence would require the passage of a constitutional amendment, which would require ratification by two-thirds of members of Congress and three-quarters of the 50 states in the United States. According to previous reports by Al Jazeera, this is an almost impossible task in the current political climate.
In addition to legal hurdles, the idea of independence faced significant practical challenges, including the need to establish new sovereign institutions, such as the military, healthcare system, and social security, which were currently dependent on the federal government. Separation may also require new agreements with the United States on trade, borders, defense, and the division of assets and debts.
Ultimately, the idea of seceding from the U.S. Union reflected California’s will to become independent, as well as its cultural and economic differences from the rest of the United States. For now, however, this is still more of a symbolic wish than a practical plan. Even if the initiative ends up in a referendum, which could take place in 2028, its outcome will not be binding unless it passes through a complex constitutional process.
However, the very idea of proposing this idea highlights the growing divide between California and the U.S. federal government and suggests a growing desire among some residents of the state to redefine their relationship with the U.S. Commonwealth.