Higher Education is Economic Development in Alabama

At the end of April, AL.com released their analysis of the fastest growing economic areas in the State, based on the Federal Reserve’s recent release of GDP data. Despite the many challenges as a result of the COVID-19 pandemic, many counites across Alabama saw sustained economic growth. In the al.com article, you can see that rural counties like Bullock experienced high levels of growth, while areas like Mobile and Madison County continued their economic growth as well.


The Higher Education Partnership completed some additional analysis and found that change in GDP, as well as GDP per capita are both strongly correlated with the percent of the population over age 25 that has a Bachelor’s degree or higher.


What is GDP and Why Are These Numbers Important?

Economic growth, put simply, is enlarging value and productivity for the economy in a specified region. Sounds pretty basic, right? On face value, it seems straightforward, but to measure economic growth in a way that can be compared or evaluated can be a little trickier. Gross Domestic Product (or GDP) represents the end value of all goods and services produced in a specific area (Read More About this Definition at the International Money Fund).


GDP isn’t always directly linked to income levels, or well-being of the individual citizens in an area for many reasons, but these indicators are often correlated, and both GDP and Per Capita Income can be used to estimate the vitality of an economy.


How Does Alabama Compare?

Alabama has grown in recent decades as a result of sustained investment in a variety of sectors from manufacturing to incentives for new business. In fact, early in 2021, Alabama was named one of the states with the fastest growing economic momentum in the U.S. (Read more from Gov. Ivey’s pressroom here). This is a positive sign for communities and individuals looking ahead to the future.


However, despite this growth, at the end of 2021, Alabama still ranked near last in both GDP per Capita and Per Capita Income (48th out of 50 states in both categories).

Our personal per capita income is nearly $15,000 below the national average and our poverty rate is higher than most surrounding states and the U.S. average.


Additionally, only 26 percent of Alabama’s working population (25 and older) has a college degree. This is a stark comparison to the 33 percent national average.


View more from the nationwide data on GDP and Income below.









Or more on educational attainment and facts from Alabama here in our Resource Guide.


What causes Economic Growth?

While the drivers of economic growth can be a little bit of a mystery, we can look towards past trends and economic theory for indicators of what builds a strong and resilient economy.

The Federal Reserve explains, “There are three main factors that drive economic growth:

· Accumulation of capital stock

· Increases in labor inputs, such as workers or hours worked

· Technological advancement.”

The article goes on to explain that historically technological advancement is the most significant factor to advance growth. Technological advancement has widespread and near irreversible effects – think, for example, about the development of the computer chip and how it’s been refined over the