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Hawaii Economy

Hawaii is economically vigorous, with diversified agriculture and manufacturing; strategically important to the global defense system of the United States; a Pacific Basin transportation and cultural centre, often called the Crossroads of the Pacific; and a major tourist mecca. Hawaiian activities of national and international importance include research and development in oceanography, geophysics, astronomy, satellite communications, and biomedicine.

Hawaii ranks relatively low among the states in terms of personal income, farm products sold, value of manufacturing shipments, retail sales, and bank deposits.

A major problem in Hawaii is the high cost of living, due in large part to Hawaii's insularity and dependence on imports. Transportation costs are included in the prices of nearly all consumer goods. As the population increases, housing grows increasingly difficult to acquire, and it is disproportionately expensive when compared with housing costs in many of the mainland states. Building materials, most of which are imported, are expensive. Residential land is limited and highly priced, since much of the property, notably on Oahu, is owned by corporations and trusts.

Efforts have been made through legislation to remedy this situation. Carefully planned housing located in communities in which the single-family home gives way to high-rise, high-density dwellings as well as townhouses and apartment complexes has become one solution to the shortages and expense associated with urban housing.

More than half the land in the state is owned by private individuals or corporations, although the state itself, holding more than one-third of the land, is the largest single landowner. State and county governments are major employers. Honolulu is the regional headquarters of the federal government, which owns one-sixth of the land.

Hawaii has no important mineral deposits; its only natural resources are its climate, water supply, soil, vegetation, and surrounding ocean and rock, gravel, sand, and earth quarried for use in construction and landscaping. Electric power is supplied by a small number of power companies operating oil-powered steam and diesel generators. Several military installations and some private institutions generate their own power. A small amount of hydroelectric power is generated on several of the islands, and in the mid-1980s a geothermal plant began producing electricity on the island of Hawaii.

Tourism: Tourism is Hawaii's largest industry. Expansion has been particularly rapid since World War II, and the growth has resulted in part from continued improvements in transportation and the stimulus provided by the state government and local businesses. The majority of visitors come from the U.S. mainland, Canada, Australia, and countries of the Far East, particularly Japan. About 60 percent of the hotel units are on Oahu, chiefly in Waikiki and the adjacent Ala Moana area.

Visitors have access to a wide range of recreational and cultural facilities, such as golf courses, tennis courts, parks, surfing sites, beaches, restaurants, theatres, musical attractions, and sporting events. Tourism has helped Hawaii to become the centre of the international market of the Pacific Basin. Capital investment by U.S. mainland and foreign companies has increased tremendously.


Although the second largest source of income in Hawaii is the federal government, primarily through defense expenditures, agriculture remains the basis of the local economy. Hawaii is the second largest sugarcane-producing state in the nation and leads in the production of pineapples. Hawaii's dominance of the world pineapple market is challenged by the lower labour costs in pineapple-producing countries such as the Philippines. There has been a slow but steady growth of diversified agriculture, including grain sorghum, corn (maize), flowers, and nursery products. Livestock, poultry, and dairy production, together with some lumbering and commercial fishing, are other important sources of income. Nearly half of the commercial fish catch is aku (skipjack tuna).


Hawaii has several hundred companies engaged in diversified manufacturing. Heavy-manufacturing plants, using raw materials for the most part imported from the U.S. mainland, include an oil refinery that produces a variety of petroleum products and chemical compounds, a steel mill manufacturing reinforcing bars, several cement plants, a concrete-pipe plant, and an aluminum-extrusion plant. Heavy manufacturing is confined mainly to the island of Oahu. Most building lumber is imported from the mainland. A number of garment manufacturers, largely situated in Honolulu, produce printed fabrics and apparel marketed locally, nationally, and abroad.

A wide variety of Hawaii-grown foodstuffs, sold locally and exported to the mainland, are processed in the state. These include Oriental and Hawaiian food specialties, such as tropical fruit juices, jams and jellies, candies, coffee, macadamia nuts, and various alcoholic beverages.

Major Hawaiian industries are unionized, as are many of the service and construction industries. The largest union in the state, and one with a turbulent history, is the International Longshoremen's and Warehousemen's Union.

Trade and Finance

Exports are largely in the form of sugar, canned pineapple, garments, flowers, and canned fish. Major imports are fuel, vehicles, food, and clothing.

State taxes are collected under a centralized tax system. The chief sources of the state's revenue are a general excise tax, individual income taxes, and federal grants-in-aid.


Ocean-surface transportation is Hawaii's lifeline, and Honolulu Harbor, with its extensive docks, warehouses, and storage sheds, is the centre of Hawaiian shipping. A large percentage of the cargo ships ply between Hawaii and California ports, a few between Hawaii and the East Coast of the United States via the Panama Canal, and others from western Pacific ports.

Around-the-world passenger ships carry visitors through Honolulu, and there is an interisland luxury cruise line. Tug-pulled barges and small freighters transport goods from Honolulu to the outer islands, returning with agricultural crops and livestock.

The majority of voyagers to and from Hawaii travel by air, as do nearly all interisland passengers. The Honolulu International Airport, on Oahu; General Lyman Field at Hilo, on Hawaii; and the Kahului Airport, on Maui, are the major civilian airports capable of serving large-jet traffic. There are several smaller airports among the islands and a number of small private airfields. Military authorities maintain a number of airports throughout the state.

Most of the roads follow lowland contours, circling the islands along or near the shorelines and crossing islands only between mountain ranges. There are many spectacular mountain roads providing dramatic vistas. On Oahu two tunnels bring traffic from the heads of two valleys behind Honolulu through the Koolau Range and out into the windward, or northeastern, side of the island. Hawaiian roads range from narrow country tracks to an eight-lane freeway, which crosses the city of Honolulu.

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