Economic Development of Hawaii

Economic Development of Hawaii

Hawaii, with an area of 28,313 sq. km (10,932 sq. mi.), is the

43rd largest state in the U.S.; 6.9% of the land is owned by the

federal government. It consists mainly of the Hawaiian Islands, eight

main islands and 124 islets, reefs, and shoals. The major islands in

order of size are Hawaii, Maui, Oahu, Kauai, Molokai, Lanai, Nihau,

and Kahoolawe. Population growth has increased by 80,000 persons over

the past five years. Demographics show a large number of Hispanic

origin: Asian Hispanics are the most populated with white Hispanic

and Asian non-Hispanic following. Hawaii's economy has been long

dominated by plantation agriculture and military spending. As

agriculture has declined in importance, the economy has diversified to

encompass a large tourist business and a growing manufacturing

industry.

Hawaii's economy has changed drastically since statehood. In

1958, defense, sugar, and pineapple were the primary economic

activities, accounting for 40% of Gross State Product (GSP). In

contrast, visitor-related expenditures stood at just over 4% of

Hawaii's GSP prior to statehood. Today the positions are reversed;

sugar and pineapple constitute about 1% of GSP, defense accounts for

just under 11%, while visitor-related spending comes close to 24% of

Hawaii's GSP.

The movement toward a service- and trade-based economy becomes

even more apparent when considering the distribution of Hawaii's jobs

across sectors. The share of the economy's jobs accounted for by

manufacturing and agriculture have declined steadily since 1959 and

each currently makes up less than 4% of total jobs in the economy. At

the same time, the shares of jobs in wholesale and retail trade and in

services have risen, standing at about 23% and 28%, respectively.

Since 1991, Hawaii's economy has suffered from rising rates of

unemployment. This stands in marked contrast to the period 1980 to

1993, when the state enjoyed very low unemployment rates relative to

the nation as a whole. But by 1994 the recession had raised Hawaii's

unemployment rate to the national average (6.1%) for the first time in 15

years. In 1995, the state's unemployment rate improved slightly in the

first eleven months of the year to 5.4 percent, a 0.6 percentage point

decline from the first eleven months of 1994. Despite the lower

unemployment rate, the total number of wage and salary jobs declined by

0.6 percent during the first eleven months of 1995. This was due in part