California has an enormously productive economy, which for a nation would be one of the ten largest in the world. Although agriculture is gradually yielding to industry as the core of the state's economy, California leads the nation in the production of fruits and vegetables, including carrots, lettuce, onions, broccoli, tomatoes, strawberries, and almonds. The state's most valuable crops are grapes, cotton, flowers, and oranges; dairy products, however, contribute the single largest share of farm income, and California is again the national leader in this sector. The state also produces the major share of U.S. domestic wine. California's farms are highly productive as a result of good soil, a long growing season, and the use of modern agricultural methods. Irrigation is critical, especially in the San Joaquin Valley and Imperial Valley. The gathering and packing of crops is done largely by seasonal migrant labor, primarily Mexicans. Fishing is another important industry.
Much of the state's industrial production depends on the processing of farm produce and upon such local resources as petroleum, natural gas, lumber, cement, and sand and gravel. Since World War II, however, manufacturing, notably of electronic equipment, computers, machinery, transportation equipment, and metal products, has increased enormously. Defense industries, a base of the economy especially in S California, have declined following the end of the cold war, a serious blow to the state. But many high-tech companies and small low-tech, often low-wage, companies remain in S California, in what is said to be the largest manufacturing belt in the United States. Farther north,
Silicon Valley, between Palo Alto and San Jose, so called because it is the nation's leading producer of semiconductors, is also a focus of software development.
California continues to be a major U.S. center for motion-picture, television film, and related entertainment industries, especially in Hollywood and Burbank. Tourism also is an important source of income. Disneyland, Sea World, and other theme parks draw millions of visitors each year, as do San Francisco with its numerous attractions and several entertainment-dominated Los Angeles–area communities. California also abounds in natural beauty, seen especially in its many national parks and forests—home to such attractions as Yosemite Falls and giant sequoia trees—and along miles of Pacific beaches.
One of the state's most acute problems is its appetite for water. The once fertile Owens valley is now arid, its waters tapped by Los Angeles 175 mi (282 km) away. In the lush Imperial Valley, irrigation is controlled by the All-American Canal, which draws from the Colorado River. In the Central Valley the water problem is one of poor distribution, an imbalance lessened by the vast Central Valley project. Cutbacks in federally funded water projects in the 1970s and 80s led many California cities to begin buying water from areas with a surplus, but political problems associated with water sharing continue. California's failure to develop a long-term plan to end surplus withdrawals from the Colorado led the federal government to stop the release of surplus water to the state in 2003.
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