Economic History of Hawai‘i

Hawai‘i became one of the last two major land areas on the planet to be settled when Polynesians from Tahiti and the Marquesas Islands navigated voyaging canoes to Hawai‘i in the 11th or 12th century. Settlers brought plants and animals needed to start taro farms modeled on those in their homelands and established chiefdoms using traditional norms of behavior and governance institutions from their home societies. Sometime round 1400, Hawaiians lost contact with the outside world and remained isolated for the next 350–400 years. During this period, competing states emerged, ruled by a sharply differentiated elite (ali‘i) and supported by agricultural surpluses sufficient to support religious and artisan specialists and construction of hundreds of monumental temples. Contact with the outside world was reestablished in 1778 and led to major demographic, economic, and political change: Exposure to outside diseases led to a massive decline in the Native Hawaiian population over the next 125 years; integration with global product markets transformed Hawai‘i’s economy; and warfare among competing states led to the emergence of a centralized monarchy after 1795 that incorporated and adapted some Western political institutions. In 1820, Protestant missionaries brought a foreign religion to Hawai‘i, helped develop a Hawaiian alphabet, and established mission schools that brought literacy to much of the population. A two-decade boom (1812–1833) in harvesting and trading sandalwood with American ships overlapped with a 50-year period in which hundreds of Pacific whaling ships visited Hawai‘i annually to hire Hawaiian sailors and purchase provisions and services. Sugar plantations spread from 1835, expanded rapidly during the U.S. Civil War, and fell back with peace in 1865. An 1876 trade treaty with the United States exempted Hawai‘i sugar firms from the high U.S. tariff on sugar, and they responded by expanding production tenfold by 1883, using immigrant labor from China, Portugal, and Japan. Problems with renegotiating the treaty led to a rebellion by a mostly Caucasian militia group in 1886 that culminated in the overthrow of Queen Lili‘uokalani in 1893. The United States annexed Hawai‘i in 1898 and established a colonial “territorial” government that persisted until Hawai‘i was admitted to the U.S. economic and political union in 1959 as its 50th state. Pineapple and sugar industries expanded under protection of U.S. tariffs and with employment of migrant labor from Japan, Europe, Korea, the Philippines, and Puerto Rico. Japan’s attack on Pearl Harbor in 1941 was followed by imposition of martial law and the buildup of a large U.S. military presence. The economy struggled after the war until the introduction of jet plane passenger service in 1958 prompted millions of tourists from the United States, Japan, and other countries to visit Hawai‘i each year. The tourism boom, institutional reforms of statehood, and population growth ignited an economic boom that would continue thru 1990 and modernize the economy. The 1990s saw economic contraction as Hawai‘i adjusted to changes in U.S. tourism and Japanese foreign investment. From 1990, periodic disruptions to tourism caused by recessions, security crises, and global pandemics punctuated otherwise moderate economic growth.