Also, analysts say, decades of militant trade unionism led by the Communists has led to a poor work ethic and an "estrangement" from private investments - a condition similar to India's other Communist-run state, West Bengal.
Nobel laureate economist Amartya Sen says Kerala has to "learn from the world".
Yet, today, Kerala is a straggler economy almost entirely dependent on tourism and remittances sent back by two million of its people who live and work abroad, mostly in the Gulf.
Joblessness is rife due to the lack of a robust manufacturing base - more than 15% in urban areas, three times the national average.
Economists draw parallels with the Philippines and Sri Lanka, which face similar problems.
And Kerala has not benefited directly from the rise of its biggest service industry, tourism.
Kerala lives off remittances and it lacks a manufacturing base.Why is India's most socially developed state - and one of the developing world's most advanced regions - an economic laggard?This question about Kerala, known all over the world for its lush landscapes, sun-drenched beaches and idyllic backwaters, has been a subject of intense debate among economists and social scientists.Road networks are extensive, but the state has few highways.Electricity has reached nearly every village but the quality of service is poor.