Hawai'i's high-technology sector grew by nearly 10 percent between 2001 and 2004, which was nearly twice as fast as the job growth rate for the state.

Still, the fledgling sector remained a minor part of the state's economy, representing fewer than 15,000 jobs, or just 2.5 percent of the state's workforce, according to figures recently compiled for The Advertiser by the Bureau of Labor Statistics.

The pace of growth in Hawai'i — 1,321 jobs and $170 million in new wages — exceeded the national rate of expansion. Nationally the number of tech jobs and wages declined in the wake of the bursting of the tech bubble in late 2000.

Growth of Hawai'i's tech sector coincides with the state's new tax credits for high-tech investment. Hawai'i lawmakers created the nation's most generous high-tech tax incentives in 2001.

Since then the state has foregone more than $110 million in tax revenues and could be tagged with another $60 million in yet-unclaimed credits.

Exactly where Hawai'i's new tech jobs are remains a bit of a mystery. The state keeps the identities of businesses benefitting from the credits confidential. However, growth at companies such as Hoku Scientific Inc. is obvious.

Hoku, a Kapolei-based fuel cell technology company, has added about 15 jobs since 2002 and has become a publicly traded company. Hoku benefited from $240,000 in state research tax credits during the nine months ended Dec. 31, 2005. That was on top of $193,000 in credits claimed during the prior-year period, according to a filing with the Securities and Exchange Commission.

Hoku's growth has created an opportunity for Christopher Ablan. Ablan, 29, attended college in California thinking he would have to stay there to create a career.

"I realized you can't come back home because there's no opportunities," he said. "The opportunities tended to be far and few."

Six weeks ago Ablan returned to Hawai'i from San Francisco to take a job at Hoku. Overall, 14 of Hoku's 29 full- and part-time employees were born and raised in Hawai'i, the company said.

The job at Hoku "is ideal — doing science at a place where you can be close to your family," Ablan said. "Man, you can't lose."

Have credits mattered?

Job figures show that Hawai'i is creating technology jobs. What's unclear is whether those jobs would have been created even without the credits, said Bank of Hawaii economist Paul Brewbaker.

"While it shouldn't surprise us if rational economic agents actually pick up free money lying around on the ground, it doesn't really tell us much about whether their bending over had anything to do with where they were going in the first place," he wrote in an e-mail.

Since 2001, Hawai'i's largest tech sector job gains came in: computer systems design and related services (671 jobs); architectural and engineering services (613 jobs) and scientific research and development services (330 jobs). That's according to a method of tracking tech jobs developed by Carnegie Mellon University and the State Science and Technology Institute, which is an industry consultant in Westerville, Ohio. Their formula captures people working in industries that hire high numbers of science and technology workers or that have higher-than-average research and development budgets.

Using that method, Hawai'i's tech employment rose from 13,522 people in 2001 to 14,843 people in 2004, which was the most recent year available. Meanwhile, tech employment nationwide fell by 10 percent, or 871,274 people, over the same period.

"For Hawai'i to have 9.8 percent growth, I'd be pretty darn happy with that," said Dan Berglund, president of the State Science and Technology Institute. Nationally, "It's just taken a long time for the over-capacity from the dot-com bubble and Sept. 11 to really be wrung out of the system."

Hawai'i missed the boom and bust partly because the state really doesn't have the types of high-tech manufacturing jobs that have been hit hard by layoffs on the Mainland.

If Hawai'i did have such jobs, the state would have lost them, said Carl Bonham, an economist at the University of Hawai'i-Manoa.

"If we had been a semiconductor or computer manufacturer, we could have ... experienced job losses," he said. Still, "It's hard to argue with the direction of change" in Hawai'i's tech sector, Bonham added. "Hawai'i has been growing jobs at a rapid pace since our recovery from 9/11."

STILL A 'THIN' MARKET

Just because Hawai'i's tech sector is growing doesn't mean it's easy to find a job.

Steven Wells, 50, said he's searched unsuccessfully for jobs in engineering, research and management since arriving in Hawai'i last summer with his wife, who works for the University of Hawai'i.

"I think it's (being from the) Mainland, age and there also are a lot of people here that are qualified in a market that is thin," said Wells. "All I want is a chance to prove myself. I'm not giving up because this is home."

While tax credits have been credited with attracting capital to the state, an unintended consequence has been their use by investors who wrote off millions of dollars pumped into projects that did not create permanent jobs, such as movie and TV productions.

The state tax department also has expressed concern that some credits were claimed by noneligible, tax-exempt organizations, that some research spending figures were inflated, and that some investments were specifically designed to avoid state taxes.

However, when it comes to evaluating the costs and benefits of tax breaks, there just isn't enough data or research available, according to experts.

"There is not as much work as we would like to see particularly on the tax incentive side in looking at the economic impact of these types of programs," said Berglund, the industry consultant. "It's very hard to do. It's costly and it's a long-term process.

"The one issue with these credits, or really any kind of program designed to encourage technology hiring, is it takes a long time to see the impact and growth you want."

Reach Sean Hao at shao@honoluluadvertiser.com.