Pacific Perspective
Pacific Perspective
There is no shortage of economic metaphors for what Hawaii could be. We are to be the next Singapore, a "Pacific Tiger," or maybe Ireland or Israel. While all comparisons are odious, some are more nonsensical than others. One might be tempted to say, "why can't Hawaii just be Hawaii?" but when survey after survey puts us last in new enterprise creation and receptiveness to startups, clearly another model is needed. Forget Singapore, let’s
try and be DelawareIt is praiseworthy to aim high, but we should also be realistic. Hawaii does not have the infrastructure of Singapore. Both Singapore and Ireland have vast neighboring population centers with huge markets, and, certainly in Ireland's case, very low barriers to entry into those markets. (In some ways, Israel is a more appropriate comparison, but these days, who wants that?) Hawaii struggles due its geography vis-à-vis the mainland, and being in the center of the Pacific is not necessarily a plus no matter how much closer to Asia this puts us.
However, being realistic doesn't mean being defeatist. I think that there is much that the state can do to improve its competitive position, and the next governor should sign on to a comprehensive and specific program of enterprise creation. Consider Delaware. Delaware is a tiny state with large neighbors, yet it has created a niche for itself by being the place that the majority of new high-growth companies choose to incorporate. This adds millions annually to the state coffers, and has made Delaware the center of corporate law in the United States.
What accounts for Delaware's success? The "window shade state," as it's detractors like to call it, is inarguably far less endowed with natural resources than Hawaii, and lacks significant industry. What Delaware has is the political will to create a corporate licensing and registration system that is the envy of the nation. It offers easy 1-stop incorporation, and the so-called "Delaware Corp." has become ubiquitous as an organizational form for the contemporary startup.
I suggest that our next set of political leaders commit themselves to making Hawaii the Delaware of the Pacific, and to going beyond that. While we can pass tax laws and regulations that make Hawaii a more attractive place to incorporate, we can also, using and building on legislation like the high-technology tax credit, make the state an attractive environment for investors, and provide additional incentives for companies to physically (and not just legally) locate themselves in the state.
Hawaii's great strength is that it is part of the United States. There are no federal roadblocks to companies incorporating and operating here, or to investors investing here. What we need to do is remove and reverse state-created restrictions on these activities. The coming political season is the ideal time to embark on such a course. If Delaware can do it, anyone can.
Robert J. Robinson is the Barry and Virginia Weinman Distinguished Professor of Entrepreneurship and E-Business, as well as director of the Pacific Asian Center for Entrepreneurship and E-Business, at the University of Hawaii at Manoa. Reach him at Robinson@cba.hawaii.edu.