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Kerala is a state on the Malabar Coast of southwestern India. To its east and northeast, Kerala borders Tamil Nadu and Karnataka respectively; to its west and south lie the Arabian Sea and the Indian Ocean with the islands of Lakshadweep and the Maldives, respectively. Kerala envelops Mahé, a coastal exclave of Pondicherry. Kerala is one of the four states of South India.

First settled in the 10th century BCE by speakers of Proto-South Dravidian, Kerala was influenced by the Mauryan Empire. Later, the Cheran kingdom and feudal Namboothiri Brahminical city-states became major powers in the region. Early contact with overseas lands culminated in struggles between colonial and native powers. Finally, the States Reorganisation Act of November 1, 1956 elevated Kerala to statehood. Social reforms enacted in the late 19th century by Cochin and Travancore were expanded upon by post-Independence governments, making Kerala among the Third World's longest-lived, healthiest, most gender-equitable, and most literate regions. However, Kerala's suicide, alcoholism, and unemployment rates rank among India's highest. A survey conducted in 2005 by Transparency International ranked Kerala as the least corrupt state in the country.

Economy
Since its incorporation as a state, Kerala's economy largely operated under welfare based democratic socialist principles. Nevertheless, the state is increasingly liberalising its economy, thus moving to a more mixed economy with a greater role played by the free market and foreign direct investment. Kerala's nominal gross domestic product (as of 2004–2005) is an estimated 89451.99 crore INR, while recent GDP growth (9.2% in 2004–2005 and 7.4% in 2003–2004) has been robust compared to historical averages (2.3% annually in the 1980s and between 5.1% and 5.99% in the 1990s). Nevertheless, relatively few major corporations and manufacturing plants choose to operate in Kerala. This is mitigated by remittances sent home by overseas Keralites, which contributes around 20% of state GDP. Kerala's per capita GDP of 11,819 INR is significantly higher than the all India average, although it still lies far below the world average. Additionally, Kerala's Human Development Index and standard of living statistics are the nation's best. This apparent paradox—high human development and low economic development—is often dubbed the Kerala phenomenon or the Kerala model of development, and arises mainly from Kerala's strong service sector.

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