The history of Hawaii can be traced through a succession of dominating industries: sandalwood, whaling, sugarcane, pineapple, military, tourism, and education. Since statehood was achieved in 1959, tourism has been the largest industry in Hawaii, contributing 24.3% of the Gross State Product (GSP) in 1997. New efforts are underway to diversify the economy. The total gross output for the state in 2003 was US$47 billion; per capita income for Hawaii residents was US$30,441.

Industrial exports from Hawaii include food processing and apparel. These industries play a small role in the Hawaii economy, however, due to the considerable shipping distance to the ports and population of the West Coast of the United States. Food exports include coffee, macadamia nuts, pineapple, livestock, and sugarcane. Agricultural sales for 2002, according to the Hawaii Agricultural Statistics Service, were US$370.9 million from diversified agriculture, US$100.6 million from pineapple, and US$64.3 million from sugarcane.

Hawaii is known for its relatively high per capita state tax burden. In the years 2002 and 2003, Hawaii residents had the highest state tax per capita at US$2,757 and US$2,838, respectively. This rate can be explained partly by the fact that services such as education, health care and social services are all rendered at the state level, as opposed to the municipal level in all other states.

Millions of tourists contribute to the collection figure by paying the general excise tax and hotel room tax; thus not all the taxes collected come directly from residents. Business leaders, however, have often considered the state's tax burden as being too high, contributing to both higher prices and the perception of an unfriendly business climate.

Until recently, Hawaii was the only state in the U.S. that attempted to control gasoline prices through a Gas Cap Law. The law was enacted during a period when oil profits in Hawaii in relation to the mainland U.S. were under scrutiny, and sought to tie local gasoline prices to those of the mainland. The law took effect in September 2005 amid price fluctuations caused by Hurricane Katrina. The Hawaii state legislature suspended the law in April 2006.

Health care system

A notable (and much-discussed) aspect of Hawaiian government and economy is its health care system, which insures over 95% of residents. Under the state's plan, all businesses are required to provide employees who work more than twenty hours per week with health care. Heavy regulation of insurance companies helps keep the cost to employers down. In addition, due in part to the system's emphasis on preventive care, Hawaiians require hospital treatment less frequently than their counterparts in the rest of the United States, while total health care expenses (measured as a percentage of state GDP) are substantially lower. Given these achievements, proponents of universal health care elsewhere in the U.S. have sometimes used Hawaii as a model for proposed federal and state health care plans. Critics, however, note that Hawaii's success is due at least in part to its mild climate and to its status as a chain of islands whose economy is heavily based on tourism: features that make it more difficult for businesses unhappy with paying the plan's premiums to relocate elsewhere.

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