RESEARCH PAPERS ARE PRELIMINARY MATERIALS CIRCULATED TO STIMULATE DISCUSSION AND CRITICAL COMMENT. THE VIEWS EXPRESSED ARE THOSE OF THE INDIVIDUAL AUTHORS. WHILE RESEARCH PAPERS BENEFIT FROM ACTIVE UHERO DISCUSSION, THEY HAVE NOT UNDERGONE FORMAL ACADEMIC PEER REVIEW.
Specialization in tourism exposes the economy of Hawai‘i to external shocks that trigger collapses in tourist numbers. Furthermore, Hawai‘i’s economic growth has diminished for decades as the dominance of tourism has not generated productivity growth. In response, policy-makers in Hawai‘i increasingly emphasize diversification. This article examines a spatial economics perspective to explain why Hawai‘i is so specialized and to sketch policy for diversification and growth. Isolated, small, and open economies tend to be more specialized in one or a few industries because increasing returns to scale generates a coordination problem for new industries. By targeting industries that use related know-how or a Hawai‘i-specific resource, Hawai‘i can access productivity gains from the scale of related and location-bound industries.
Published: Bond-Smith, S. (2023). Diversifying Hawai‘i’s Specialized Economy: A Spatial Economic Perspective. Economic Development Quarterly, 0(0). https://doi.org/10.1177/08912424231183941