Amartya Sen, the Nobel laureate pointed to 'the Kerala model of development' as one the world could well follow. The land with a small per capita income has achieved a high standard of living.
With two monsoons and fertile soil, Kerala naturally has a predominantly agro-based economy. The state is rich in spices, tea, rubber, and paddy. But as monsoons became unreliable and labour costs rose, more and more people diverted their money from agriculture into other ventures. A lot of Kerala's wealth comes from the export of fish and fish products.
Economists refer to Kerala as a 'list market'. With a majority of its 30-million population in the middle class Kerala has a consumer culture which attracts manufacturers. The co-operative sector does very well here. The 'chitties', which originated in Kerala, have caught on all over the country. Kerala even has a ministry for the co-operative sector.
Tourism is a sector with great potential in Kerala, given the state's natural beauty and rich traditional heritage, especially in the arts. And it is a sector that is developing at a great rate. Tourism could become the biggest area of money as far as Kerala is concerned.
As more and more Malayalis moved to the Gulf countries and into lucrative jobs, there was a sharp increase in investment in land and gold due to the flow of money from there into the state. But channelisation of this money for industrial growth was seen only in some cities.
The export business is gaining momentum, and the government gives various incentives to encourage this business. With liberalisation and globalisation the MNCs began to arrive and competition with them has provided an incentive to business people here. After Independence it was public sector undertakings that provided employment opportunities and a smooth flow of money. But most of them have been unable to keep up with the rapid changes taking place in today's world and the private sector has now taken command.
The evolution of Information Technology has proceeded at a great pace in Kerala, with automation, Internet accessibility, e-commerce etc making their presence felt. But despite all this progress Kerala lags behind neighbouring states in business growth. We need a liberalised state policy, elimination of bureaucratic red-tapism, more initiatives and incentives to realise the state's potential in this area.
Kerala is a treasure trove of lovely and unexpected things to buy, and the experience of shopping itself is great fun. In addition to the beautiful handicrafts, textiles, antiques and jewellery that you will probably want to buy, you will find yourself browsing through extremely unlikely merchandise, lured into small shops by their charming names. 
Unlike most of India, there is very little bargaining in Kerala. Most shops have fixed prices, and this is true for expensive items, such as jewellery, as well as for smaller goods. The state-run emporia have strictly fixed and regulated prices. In other shops, you can try a bit of gentle negotiation, but you will probably just as gently be told that the price is firm. 
For a good selection of the range of crafts available in Kerala, start with the main handicrafts emporium in Thiruvananthapuram or Kochi. Here you will find intricate rosewood and sandalwood carvings, ivory work which carries on a centuries old artistic tradition, brass and "bell-metal" lamps and other decorative objects, and myriad interesting and useful things made from coconut, coir, cane, bamboo and straw. You will also find horn products, wooden toys and lacquerware, as well as significant and evocative masks used for the dramatic Kathakali dance dramas. 
Indian khadi ( handspun and handwoven) and handloom ( handwoven ) textiles are, of course, internationally well known, and Kerala's unique fabrics are especially fine. In the larger cities, you will find handloom emporia which feature gossamer white cotton with richly coloured borders, finely coloured plaids, and some lovely silks. Many fabrics can be bought by the metre, but make sure also to inspect the shelves of sari and lungi lengths, and they can easily be stitched into other garments. 
The northern city of Kozhikode, is the source of the English word calico, and local weavers still make exceptionally soft polished cottons, so tightly woven and delicately coloured that they can easily pass for silk. If you are travelling near the time of any festival, make sure to ask your guide, hotel manager, or the local tourist office if there are any special textile fairs or exhibitions. Often during festival season, regional weaving societies will set up temporary bazaars in towns and cities, where huge selections of beautiful fibrics will be sold directly by the producers, with the bonus of a "festival discount" on price. You might even chance upon exquisite lace work and embroidered items painstakingly made by the nuns and their pupils. 
In both Thiruvananthapuram and Kochi, you will find several good antique dealers. In Thiruvananthapuram, the two main shops are Natesan's (main shop on Mahatma Gandhi Road, branch at ITDC Ashok Hotel in Kovalam) and the Gift Corner (Mahatma Gandhi Road). In Kochi, there are several good shops clustered on the small lanes near the Mattancherri synagogue. Extremely old antiquities cannot be taken out of India without the permission of the Archaeological Survey of India, but there is a great wealth of lovely things made during the last century which make affordable and extremely rewarding purchases. Look especially for unusual bronzes and unique decorative items, such as the traditional, intricate old locks.