Diversifying Hawaii’s Specialized Economy: A Spatial Economic Perspective

By: UHERO

As widely known, Hawaii's economy is specialized in the tourism sector. Despite the dominance of tourism on the islands, Hawai‘i has experienced diminished economic growth, leading policymakers to prioritize diversification.

Steven Bond-Smith of UHERO explores a spatial economics perspective to explain Hawaii's specialization and proposes policies for diversification and growth. Smith suggests that isolated, small, and open economies like Hawai‘i tend to be specialized due to coordination challenges for new industries. The recommendation is to target industries with related know-how or specific Hawai‘i resources, to access productivity gains from related industries.