High Tech Hawaii

By Herbig, Paul A.; Kramer, Hugh E. | Journal of Business and Entrepreneurship, October 1993 | Go to article overview
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High Tech Hawaii

Herbig, Paul A., Kramer, Hugh E., Journal of Business and Entrepreneurship


Hawaii's current economic base is built upon military spending, tourism, and agriculture. During the decade of the '90s, all three segments have long-term problems that could bode ill for Hawaii if she continues to depend upon them for her economic foundation. Governmental and private planners are examining other alternatives, one of which is to make Hawaii the high technology east-west bridge between the United States and East Asia. This paper reviews those ingredients necessary for an innovative hot spot to be started and maintained, examines them in light of the current Hawaiian state, and provides recommendations on the steps necessary if Hawaii really does want to partake of the high tech scenario.


Hawaii's current economic base is built upon an extensive military presence, tourism, and agriculture. That Hawaii has been successful is indicative in the extremely low unemployment seen in the isles. However, success could be fleeting in the decade to come. High land prices, high labor costs, and lower priced foreign competition have made agriculture an iffy proposition for the '90s. Within the next decade, even with expensive price supports, long term intensive agricultural pursuits, especially on Oahu, could well all but disappear, their economic importance minimized by the end of the decade.

By way of contrast, military expenditures have been increasing. With the closing of Clark and Subic Bay in the Philippines, Hawaii appears the only secure long-term base the U.S. has in the Pacific. However, with the end of the cold war, overall military spending will only decrease. Even if the military presence on the island increased, the effect on the local labor force would be minimal. Most of the increase would be in transient military or civilian specialists from the mainland. Additional local jobs would be mainly in service or support functions.

Tourism has boomed during the eighties and reaches nearly 8 million visitors a year. Eastbound tourism (mainly from Japan) is increasing rapidly as Hawaii becomes the major foreign destination for the Japanese. Tourism, though, is not a constant predictable force. The Japanese trade is erratic. In the mid-eighties, Japanese tourism to the Philippines vanished overnight due to one incident concerning a Japanese businessman. The impact of the Japanese economic slowdown, stock market crash, and real estate free-fall may mean the number of Japanese tourists to Hawaii may substantially slow down or even come to a sudden halt. If one major negative incident occurs (say, for example, a bombing in a Waikiki hotel by Hawaiian sovereignty forces), Japanese tourists may stay away in droves. The economic health of a resort is a fragile thing, as Atlantic City and many past glory spots now realize. If not kept up and in tune with tourists' expectations, those tourists leave forever.

With the three currently strong legs of the Hawaiian economy displaying very fragile and weak long-term potential, other sectors of the economy must be examined. Grant Thornton of Bechtel Civil Inc., in his March 1989 report "Hawaii As An International Business Center," listed 21 potential business opportunities. The list included the development of Corporate Regional Headquarters, Education/Training Center, Pacific Islands Center, Convention and Conference Center, and Research Centers. The Governor's Congress on Hawaii's International Role held on December 6-7, 1988, provided a similar list of potential opportunities including the establishment of an Asia-Pacific Institute of Business and Commerce, an International Banking and Finance Center, a Honolulu Stock Exchange, a Cross-Cultural Center, a Sports/Wellness Fitness Center, and an International Training, Consulting and Research center. One idea focuses on Hawaii as a research center, a high tech East-West bridge between the United States and East Asia. High Tech has been shown to be a growth force in other parts of the United States.

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