Enhance Quality of Life

Improve Employment, Education & Investment Opportunities
:Foster Sustainable Tourism
:Economic Diversification & Capital Investment
:Expanding Agriculture
:Leveraging Our Public Schools & Higher Education System
:Improving Our K-12 Public Education & Facilities
:Private-public-labor partnerships for education & workforce improvements to match local workforce present & future needs

Upgrade Infrastructure and Review Our Master Planning Process

EMC Recommendations

Summary of Recommendations

2005 Final Report

Source:  State of Hawaii Data Book 2004

(More Data below)

Problem: Economic Vulnerability from Lack of Sufficient Diversification:  The state’s economy is currently strong with low unemployment and broad-based industry growth.  However, the underpinning of that growth is based on surging tourism service exports.  This means that much of the strong job growth has been in lower paying, lower skilled areas (retailing, food service, accommodations) with less growth in higher paying professional and technical areas.  Construction and real estate are generating considerable activity, but these sectors are fueled by investment activity, not market demand for Hawaii’s exports.  Besides military and diversified agriculture sales, Hawaii’s export markets are still relatively small.  Diversification of income-generating activity is taking place in technology, film, agriculture, captive insurance and others, but it is a very slow process.  Diversification of the economy will soften the landing of the next downturn in tourism or military spending, and create higher paying jobs.  Challenges to Hawaii becoming a more diversified, vibrant economy lie in the following areas: 

Hawaii’s Business Climate Is Critical to Economic Development and Diversification

• Unnecessary or over regulation of business and many professions can be a disincentive to new business.
• While the overall cost of living is relatively higher in Hawaii, it is the spiraling cost of housing that is a serious barrier to recruiting talent to the state including Kama’aina overseas who would like return.

Entrepreneurial Sector is Underperforming

• The heart of a robust economy is entrepreneurial energy and a culture of risk taking.   Certainly, small local markets and the distance to outside markets are natural barriers to entrepreneurs in Hawaii. But there are other barriers over which we have some control.
• Entrepreneurship is underemphasized as a career alternative in elementary and secondary education.
• There is a significant shortage of financial support, including bank loans, for Hawaii entrepreneurs and startups.
• It is common for entrepreneurs to experience several failed business attempts before finding a successful formula.  However, local culture, including the media, tends to overemphasize business and investment failures and does not sufficiently celebrate successes and advancements. This discourages local entrepreneurial risk taking and contributes to a dampening effect on the willingness of large institutional investors to invest in Hawaii startups. 
• Mentoring and communication/information networks for entrepreneurs to find resources are inadequate.

Demand for Workers Will Exceed Readily Available Supply

• The retirement of the baby boomers will drastically reduce supply of workers.
• Relevant and affordable education and training of our youth and adult population are essential to attracting and retaining diversified industries.

The University Of Hawaii System Needs More Leveraging

• The University needs to enhance its status as a premier institution for both teaching (workforce development) and research and we need to leverage the investments made, and to be made, within the University System. Only then can we maximize the University’s contribution to the Hawaii economy.
• World-class researchers need to be recruited to the University to generate commercialization of technologies and intellectual property.
• The technology development and transfer functions at the University can better encourage risk taking (including internal risk taking with technology transfer) and spin-offs of technologies into Hawaii startups, with a long term view to philanthropy and economic development.
• Collaborations between the University and the private sector need to foster identification of technologies that can be commercialized and intellectual properties that can be spun off into promising Hawaii startups.

Sufficient Resources Are Not Available To Grow a Critical Mass of Technology Companies to Self-Sustainability

• Until there is a critical mass of emerging companies and venture capital in Hawaii, Hawaii needs to take a proactive role to promoting Hawaii companies and deal flow to investors and others in Silicon Valley and other locations outside Hawaii.
• Public and private sources of private equity in Hawaii need to invest in Hawaii venture capital and startups before we can expect outside venture capital to invest.
• Great focus needs to be placed on identification and support of sustainable industries, such as the development of a Life Science Research Center in Kakaako, rather than taking a shotgun approach.
• Current technology incentives, including Act 215, need to be re-examined and refined as necessary based on learning to date.
• Ways must be found to build connections between technology companies and the requirements of both military and civilian contractors who can utilize their expertise.

Venture Capital Investment in Hawaii:  1996-2002

Source:  PricewaterhouseCoopers, National Venture Capital Association Money Tree Survey.  Aggregate numbers vary from primary research conducted by Dan Cook for Enterprise Honolulu, including interviews and compilation from press clippings.