Kerala’s economy can be best described as a democratic socialist welfare economy. However, Kerala’s emphasis on equitable distribution of resources has resulted in slow economic progress compared to neighboring states (particularly Karnataka). Relatively few major corporations and manufacturing plants are headquartered in Kerala. Remittances from Keralites working abroad, mainly in the Middle East, make up over 20% of State Domestic Product (SDP).

The new Kerala Technopark, a 156 acre campus with 1.4 lakh m2 of office space hosting some 10,000 IT professionals, is representative of Kerala’s rapidly growing BPO industry.

Coconut, tea, coffee, rubber, cashew, and spices - including pepper, cardamom, vanilla, cinnamon, and nutmeg - comprise a critical agricultural sector. A key agricultural staple is rice, with some six hundred varieties grown in Kerala’s extensive paddy fields.[4] Nevertheless, home gardens comprise a significant portion of the agricultural sector. Related animal husbandry is also important, and is touted by proponents as a means of alleviating rural poverty and unemployment among women, the marginalized, and the landless. Feeding, milking, breeding, management, health care, and concomitant micro-enterprises all provide work for around 32 lakh (3.2 million) of Kerala’s 55 lakh (5.5 million) households. The state government seeks to promote such activity via educational campaigns and the development of new cattle breeds such as the “Sunandini”.

Kerala is an established tourist destination for both Indians and non-Indians alike. Tourists mostly visit such attractions as the beaches at Kovalam, Cherai and Varkala, the hill stations of Munnar, Nelliampathi, and Ponmudi, and national parks and wildlife sanctuaries such as Periyar and Eravikulam National Park. The “backwaters” region - an extensive network of interlocking rivers, lakes, and canals that center on Alleppey, Kumarakom, and Punnamada - also see heavy tourist traffic. Examples of Keralite architecture, such as the Padmanabhapuram Palace, Padmanabhapuram, are also visited. Kochi, the commercial capital of the state, is known as the “Queen of the Arabian Sea”. Alappuzha, the first planned town in Kerala, is called the “Venice of the East”. Tourism plays an important role in the state’s economy.