Trade "Clusters" and Hawai'i's Economy

Dec 7, 2017

University of Hawai'i professor, Carl Bonham, discussed trade clusters as a way of understanding the state's economy.
Credit Wayne Yoshioka

The Hawai’i Economic Associated hosted a discussion of new research to better understand Hawai’i’s economy. HPR’s Wayne Yoshioka reports.

Private Sector Clusters are the regional concentration of related industries.  U-H Economic Professor, Carl Bonham, says the Hospitality and Tourism cluster in Hawai’i is five times more concentrated based on employment than in other states.  And it dominates the Valley Isle.

“Maui is the most concentrated county for tourism of any of them.  There’s 3-thousand-something counties and Maui’s up there because 70 percent or something like that of their total employment is in a strong cluster.  In fact, they’re paying above Honolulu wages in the hospitality and tourism sector.” 

Traded industries, like hospitality and tourism, compete globally but share local resources, occupations and infrastructure.  This reduces cost, increases productivity and makes the industry more competitive.   The fastest growing sector in the state is the Education, Knowledge Creation and Research sector, boosted by the university and telescopes.

“For roughly the last 15 years that sub-cluster’s grew 100 percent over that time period.  And on pretty much all islands, that sub-cluster has some of the highest wages – certainly on the Big Island – so we’re talking wages in the hundred-thousand dollar range.  Kaua’i is mostly seed corn and the interesting thing is it doesn’t really show up on Maui.”

But, overall, Bonham says, Hawai’i wages are relatively low because of the strong Hospitality and Tourism sector.  He says some of that may be due to self-selection.

State economist Eugene Tian
Credit Wayne Yoshioka

“At least some of that low wage is a result of us deciding that the amenity values of Hawai’i are really high.  And most of us in this room have chosen to earn a little bit less than our mainland counterparts and to pay quite a bit more for housing.”

Meanwhile, State Economist, Eugene Tian, says Hawai’i’s 90 billion dollar gross domestic product is projected to grow 1.5 percent.

“Real Estate is the largest industry in the state.  It’s even higher than tourism.  Tourism has been growing and next year it’s going to be a good year.  We have the lowest unemployment rate and our median household income, we’re the sixth highest in the nation.  It’s about   80-thousand per family.”

For HPR News, I’m Wayne Yoshioka.

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