Pacific Perspective


Exporting services
is one key to isle future

Almost all of us in Hawaii would like to see more diversification in our economic base. The decline of large-scale agriculture combined with defense industry cuts have left tourism as the mainstay of Hawaii's economy. And though progress is being made, the dream of developing a critical mass of high technology industries has not become a reality.

We all know that the global economy is shifting from manufacturing to knowledge-based industries. However, just how far this transition has progressed in the United States may surprise even the most ardent supporter of the "new economy." According to U.S. Department of Commerce statistics, the service sector is now the largest component in the U.S. economy, accounting for 80 percent of U.S. GDP and more than 80 percent of private non-farm employment.

The United States is also the world's premier services exporter, accounting for nearly one-fifth of all global services exports. U.S. services exports have more than doubled in the past 10 years, reaching a record $279 billion in 2000 and are expected to grow to nearly $400 billion in 2004. Most importantly for Hawaii, the pace of U.S. services export growth has been set by a rebound in Asia-Pacific service exports since 1998.

How can Hawaii take advantage of this tremendous growth in services industries and their related exports? A logical approach will be to build upon and expand our successes in services. America's top service exports are in: travel (29 percent); transportation (18 percent); financial services (9 percent); commercial, professional and technical services (7 percent); education and training services (4 percent); entertainment services (3 percent); and information services (2 percent). Hawaii already is a leader in the export of travel services. If our local airlines and shipping companies are able to expand into other markets, our transportation service exports could also complement our tourism exports.

In financial services, Hawaii has an opportunity to develop a growth strategy. Our growing captive insurance industry, supported by related investment banking services, may provide one of our best avenues for growth in this industry.

Commercial, professional and technical service exports include construction, engineering and architectural services. It is easy to identify Hawaii firms in these industries that have achieved world class competitiveness. The development of entertainment services, dominated by motion picture and TV is also an area of promise.

One overlooked area for Hawaii's economic growth is in educational and training services. Hawaii should do more to exploit the opportunity to develop this lucrative, environmentally friendly and high-paying growth industry. Educational services can be delivered either in Hawaii or at the customer's location, either in person or via distance education. Our multicultural population can serve as a powerful asset.

With services now dominating America's economic base, one solution to diversifying Hawaii's economy is clearly within our reach. We only need the will and the wisdom to support the growth of the world class service industries in our own backyard.

Shirley J. Daniel is the Henry A. Walker Jr. Distinguished
Professor of Business Enterprise at the University of Hawaii
College of Business Administration. She can be reached
through the College Relations Office:

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