What this means is that the small contribution being made by new technology was not able to overcome other inefficiencies in the economy that were causing overall productivity to fall, even though labor and the capital stock were increasing. The improvement in the contribution of technology shown for the 1995-98 period reflects the effort to improve efficiency by both the private and public sectors. The private sector increased its efficiency, introduced newer technology and began to focus on areas where it could be more competitive. The State s program of budget restraint, regulatory reform and business stimulation instituted by Governor Cayetano in 1995, has also been an important factor in improved productivity. The improvement illustrates the potential boost that technology can provide to the economy.
Technology development permits the economy to expand, even when capital and labor growth are modest.
It is important to note that Hawaii already has an established base of technology-related activity to build on. In fact, with little fanfare, that base has had a positive impact on the economy in recent years, even helping to cushion an otherwise flat or declining job count in other industries. For instance, from 1990 to 1997, the number of jobs in business computer services nearly doubled in the state. This helped jobs in the broader business services industry to show a growth of more than 85 percent for the same period. Jobs in the economy as a whole increased only one-half percent over the period and would have been even lower without the boost from technology activity.