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DOD spending accounts for nearly one-fifth of Hawaiian economy

Economic activity generated by Defense Department spending accounts for almost one-fifth of Hawaii’s economy, according to a new study released June 1 by the RAND Corp.

Although DOD spending in the nation’s 50th state was previously presumed to be considerable, the RAND study is the first to quantify the impact of the military’s checkbook. Hawaii is home to 10 major military installations (including Fort Shafter-headquarters of the Army Pacific Command, Pearl Harbor Naval Air Station, Kaneohe Marine Base and Hickam Air Force Base) and more than 100,000 service members and dependents.

DOD spending in Hawaii averaged $6.5 billion per year from fiscal 2007 to 2009. Of that, $4.1 billion was for personnel and $2.4 billion for the purchase of goods and services in Hawaii, the study states. The study reported that this $6.5 billion in spending generated 101,000 jobs and $12.2 billion in goods and services, or 18 percent of Hawaii's economic activity in 2009.

“It’s common knowledge that defense activity in Hawaii plays a significant role in Hawaii’s economy, but the size of that role has not been previously studied and quantified,” said James Hosek, lead author of the RAND study and a senior economist at the nonprofit research organization. “For example, 20 percent of defense procurement goes to the professional, scientific and technical services industry, and generates further economic activity.”

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