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Hawaii: Innovation and Diversification Key to Future Growth

Mary Lou Byrd (Aug/Sep 09)
Hawaii has seen its tourism industry severely impacted by the economic downturn, but there have been some signs of stabilization. Pearl Imada Iboshi, state economist and economics research administrator, says signs of stabilization have shown up in the visitor count data that her department closely watches. "The slight increase in domestic passengers somewhat offsets the international, largely Japanese, market," she says.

If the economic downturn has a positive side for the Aloha State, it's that it has reinforced the state's need to diversify its economic base - and its long-term plan to do so is taking shape. Besides its tourism-based economy, the state has focused on innovation in the past several years, and the governor has implemented several initiatives to aid the state in its shift to an innovation-based economy. The Hawaii Innovation Initiative is a plan to transform the state's economy from one dependent on land to one that "builds on the ingenuity and the ability of Hawaii's people to innovate," according to the governor's office.

To foster high-tech development and growth, Hawaii has implemented many programs. The High Technology Development Corporation was formed to cultivate the technology sector; and the University of Hawaii Office of Technology, Transfer and Economic Development helps to partner university technologies with industry. The Asia-Pacific Technology Transfer Office similarly helps transfer research to industry. The Hawaii Science and Technology Institute and the Hawaii Science and Technology Council both support science and technology to foster growth and innovation success in the state.

Hawaii has already seen growth in the technology industry. According to the Hawaii Science & Technology Council's latest report, technology activity in the state accounted for more than 31,000 jobs in 2007, or about 3.6 percent of the work force. That's an annual change of 2.9 percent each year since 2002, when 26,900 were employed in technology. The reports says this industry has grown faster than the state's economy as a whole, with strength in the areas of computer programming, research and development, and agricultural biotechnology.

One area for growth in the next several years could be space tourism, according to the Associated Press. The first step for the state would be to apply for a spaceport license from the federal government, then it could take three years for the process of offering space flights would be completed. According to a study by Rocketplane Global, entitled Spaceport Hawaii, the space tourism industry could be a $1 billion to $2 billion industry in the first five years of operation. Rocketplane Global is a company in the space tourism industry that would benefit financially if the market in Hawaii opened up.

In aerospace, the state supports several industry organizations. Its Office of Aerospace Development was formed to identify opportunities to help aerospace-related industries in the state and help build partnerships between local universities and businesses. The Pacific International Space Center for Exploration Systems (PISCES) is an international research and education center that builds on partnerships between industry, university, and different governments around the world to develop new technologies to sustain life on the moon.   

On the national front, the construction industry in Hawaii has been hard hit, but federal funds from the American Recovery and Reinvestment Act should offer some support for that sector. Iboshi says that the stimulus funds have started flowing into projects in the state. "Some of the funds are going to airport modernization and highway improvements," she says. The Senate Defense Appropriations Subcommittee in early July approved $329 million for military construction projects in Hawaii, according to the Associated Press. About $74 million is slated for Pearl Harbor and $184 million for Schofield Barracks. Nearly $1 million is to be used to plan and design a runway at Kona International Airport on the Big Island.
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