Orazem, Peter

Kansas Policy Review Vol. 26 no. 2 (Fall 2004): 1-9.

Over the past quarter century, Kansas has grown at 2.4% per year compared to the U.S. average of 3.1% per year. Kansas has also grown more slowly than the other Prairie states, although the gap is only 0.1% per year. The puzzle is that as a relatively highly educated state, Kansas should have been benefiting from the skill-using technological changes that have been credited with accelerating economic growth for the U.S. as a whole. This study shows that half of the gap in economic growth in Kansas is due to slow employment growth and half to slow growth in labor productivity. The slow labor productivity growth has slowly eroded the competitive position of Kansas firms from one of cost advantage versus other states in 1977 to a competitive disadvantage most recently. The underlying cause for the slow growth is unclear, although there is some evidence supporting two possible causes: low population density and underinvestment in information technologies such as High-speed Internet access.