Tuesday, March 29, 2011

Tennessee: Your difference is showing

If you check out Western Kentucky University's new Center for Applied Economics online, here's some things you will find out about the commonwealth and its economic vitality:

  • Kentucky's economy relies more heavily on manufacturing than all of the surrounding states other than Indiana. The commonwealth is 59 percent more dependent on manufacturing than the national economy.

  • Notice how Kentucky's growth lags behind neighboring states:
  • Persistent small differences in growth rates become a big deal over time. For instance, while Tennessee only grew at a 1.4 percent rate higher than Kentucky per year between 1997 and 2008, it added up to a 16 percent gap -- or a per capita income difference of $29,000 (Ky.) and $33,000 (Tenn.) during that decade.

  • Kentucky and Tennessee share 350 miles of border and are similiar in terms of size, geographical features and historical/cultural similarities. Yet Kentucky lags behind:

    • Ky's "aggregate personal income" has dropped from 86 percent of Tennessee's to 64 percent over the last 45 years.

    • Ky's per capita income has dropped from 98 percent of Tennessee's to 92 percent.

    • Ky's population has dropped from 82 percent to 70 percent of Tennessee's.

    • Between 2000 and 2005, more than three times as many people moved to Tennessee as moved to Ky. Could it be that lower tax rates, a reliance upon the sales tax rather than punitive income taxes, school choice and a right-to-work law really do have consequences?

2 comments:

Anonymous said...

Kentucky's considerable reliance on manufacturing is one reason why the current attacks from Washington on water and energy are particularly troubling here.

At present, Kentucky offers advantages for industry with good energy and water supplies.

But, DC's strong attack on coal will drive the cost of energy sky high here, and the recent announcement of huge, EPA-driven increases in water and sewer rates in N. KY may make it hard to keep existing industry, let alone attracting new plants.

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