Category

Strengths (S)

Weaknesses (W)

Opportunities (O)

Threats (T)

Ease of Doing Business

Top Tier for Startups: Ranked in the Top 10 nationally for starting a business (2025). Responsive Government: Ranked highly for business incentives and cooperative/responsive state and local government.

Perceived Complexity: While supporting new businesses, the legislative session occasionally requires bills to align state safety standards with federal rules to ensure consistency for interstate operators.

Attracting New FDI: Strong rankings can be leveraged to attract more Foreign Direct Investment (FDI) and companies seeking an expedient market entry process.

Evolving Regulations: Continuous changes in federal and state regulatory landscapes create uncertainty, particularly for small businesses navigating compliance.

Domestic Manufacturing

Manufacturing Powerhouse: Leads the nation in vehicle production and electric vehicle (EV) battery production (e.g., major investments from Ford and GE Appliances). High Contribution to GDP: Manufacturing represents over 12% of the state's workforce, surpassing the national average, and contributes $47.5 billion to the state's GDP.

Reliance on Key Sectors: Over-reliance on the automotive and aerospace sectors makes the state vulnerable to downturns or supply chain shocks in these specific industries.

Advanced Manufacturing Hub: Continued investment in EV and battery manufacturing (e.g., massive battery plant projects) positions the state as a future hub for advanced, high-tech manufacturing jobs.

Global Supply Chain Disruptions: As a major manufacturing logistics hub, Kentucky is highly susceptible to global supply chain issues, which can halt production and increase costs.

Sustainability Initiatives

Focus on Innovation: Major initiatives are underway in resilient construction (e.g., 3D-printed homes to withstand disasters) and metals/recycling innovation. Prominent Research: Home to institutions like the Christina Lee Brown Envirome Institute, focusing on environmental health research.

Energy Mix Transition: Historically reliant on traditional energy sources, the transition to fully align with aggressive national or global decarbonization goals may face political and economic hurdles.

Green Investment Growth: Economic development is focused on energy storage and EV technology, creating a path for green, high-wage job growth and securing future economic sustainability.

Climate Risk: The state faces environmental threats (e.g., extreme weather, derailments) that require significant public and private resources for emergency response and mitigation efforts.

Balance of Trade

Export Stronghold: High export volume (16.3% of GDP) in key categories like aerospace parts, cars, and pharmaceuticals, making it a critical exporter. Logistics Hub: Home to a massive UPS hub and a robust manufacturing logistics network, facilitating high volumes of both imports and exports.

Highest Trade Reliance: Kentucky's economy is the most reliant on global trade of any US state (imports equal 32.3% of state GDP), making it exceptionally sensitive to international policy changes.

Diversification of Partners: Potential to expand trade with non-traditional partners to mitigate risks associated with primary partners (Canada, UK, France, Mexico, Japan).

Reciprocal Tariffs: Highly vulnerable to the current US reciprocal tariff regime, with key export products like bourbon, autos, and soybeans facing retaliatory tariffs from trading partners (e.g., China).