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Kentucky’s economy—based on manufacturing, trade, mining, agriculture, and tourism and other services—varies by region. The Bluegrass is an affluent region with a large number of manufacturers and numerous amenities. The Pennyrile is likewise diversified and prosperous, but economic conditions in the Western Coalfield and the Mountain regions fluctuate with the demand for coal. The Purchase relies extensively on agriculture, and periods of drought or depressed crop prices sometimes bring hardship to the region. Although manufacturing is the greatest income producer for the state, eastern Kentucky has little manufacturing activity, and a few other areas have none at all.
Agriculture, forestry, and fishing
Until the mid-20th century, Kentucky was considered an agricultural state. Since that time, other sectors have overtaken agriculture as the primary contributors to the state’s gross product. However, while the number of farms and the acreage devoted to agriculture have declined, average farm size has increased, and more than half of the state is still in farmland. The vast majority of Kentucky’s farms are owned by individuals or families (as opposed to corporations), and almost one-fifth of the state’s total workforce is employed in farm or farm-related jobs. Principal crops include corn (maize), soybeans, hay, and tobacco, although tobacco acreage has been declining since the late 20th century. Much of the tobacco is exported. Kentucky also is a top producer of horses, mules, broiler chickens, and cattle.
The Bluegrass region, with the richest soil, specializes in horses, cattle, and tobacco. The Pennyrile has more diversified farming and produces a variety of crops and livestock, including beef and dairy cattle. The Western Coalfield and the Purchase specialize in corn, soybeans, and tobacco, although some livestock, especially hogs, and smaller acreages of other crops are found. Forestry is important in eastern Kentucky, where most of the land is unsuitable for farming, and in the eastern part of the Pennyrile; the trees cut are mostly hardwoods, primarily oaks. Kentucky has little commercial fishing, but its streams and reservoirs provide excellent opportunities for sport fishing, and they attract numerous tourists.
Resources and power
Vast reserves of bituminous coal have placed Kentucky among the country’s leading coal producers for many years. Coal is found throughout the Western Coalfield region and the eastern coalfield segment of the Mountain region. The Western Coalfield yields a product that is high in sulfur content and that is used primarily for steam generation of electricity and for domestic needs. Eastern Kentucky coal is of higher quality and can be used to make coke, a nearly pure form of carbon used in metallurgy. Both underground and surface mining methods are used in Kentucky’s coalfields.
The two coalfields and the Pennyrile also have oil and natural gas deposits, although they are not large. The state has a few refineries, for which most of the crude oil is piped up from the Gulf Coast. Deposits of vein minerals are found in Kentucky as well, along with a variety of clays and an abundance of limestone.
Almost all of the state’s electricity is supplied by coal-fired plants, which are most densely concentrated in the Western Coalfield. Hydroelectric stations in the southwestern and south-central part of Kentucky provide the bulk of the remaining power. Natural gas, both from a field at the Big Sandy River and from the Gulf Coast, also fuels several plants.
Manufacturing
Manufacturing is the largest single contributor to Kentucky’s economy, accounting for nearly one-fifth of the state’s gross product. Although widely dispersed, manufacturing is concentrated in the urban areas, especially around Louisville, which supports such industries as automotive assembly, printing and publishing, food processing, and the manufacture of home appliances. Since the late 20th century, metals-related industries have dominated the sector’s growth; Japanese companies opened more than 150 factories, most of which are located in the central part of the state and produce automobiles and automobile parts. Meanwhile, textiles have remained an important product of the sector, although many textile plants, often located in smaller communities, left the state. Calvert City, near the mouth of the Tennessee River, has a large concentration of chemical and smelting industries. Several cities, including Frankfort and Bardstown, among others, are noted for their distilleries, which supply a major portion of the world’s bourbon, as well as other beverages.
Services and labour
The services sector generates some two-thirds of Kentucky’s gross product and employs more workers than any other segment of the state’s economy. State and local governments are major employers. Two large military bases, Fort Knox and Fort Campbell, contribute substantially to the economies of the surrounding communities. Retail and wholesale trade also constitutes a significant segment of the services sector.
A strong labour union tradition exists in the towns along the Ohio River, and the United Mine Workers of America (UMWA) is influential in the coal regions. Early struggles between the UMWA and coal operators in eastern Kentucky gave rise to tragic violence. The city and county of Harlan were the site of intense labour wars during the 1920s and ’30s; the name “Bloody Harlan” commemorates that conflict, evoking the working and living conditions that at the time were popularly identified with those of the state as a whole. Numerous ballads recount the history of dispute and death surrounding work in the coal mines.
Transportation
Interstate highways cross Kentucky from north to south and east to west. They are supplemented by a system of parkways, U.S. highways, and state highways that make travel by automobile or truck relatively easy almost everywhere in the state. Rail lines connect all major cities for movement of freight. Bulky freight is often shipped by river barge over Kentucky’s many miles of navigable waterways. Major airports in northern Kentucky (part of the Greater Cincinnati area) and Louisville offer international and domestic service; the airport in Lexington handles domestic flights, mostly within the eastern half of the United States.