The economic history of Kaua’i, anglicized as Kauai, dates back to before the European colonization of Kauai and, in whole, Hawaii. Before Captain James Cook discovered the Hawaiian island chain in 1778, the native Polynesians of Kauai had a complex subsistence economy of fishing and trade among the other islands. In 1835, the first successful sugarcane plantation was established in Koloa, Kauai and was the beginning of a prosperous sugarcane industry. Sugarcane remained Kauai's most dominant industry until the mid-20th century. Today, Kauai is a tourism-centered economy with 1,279,968 people visiting the island in 2017. Visitor spending on the island the same year exceeded $1.83 billion—a 9.3% percent increase from the previous year. However, Kauai still boasts a strong agricultural economy with corn seed being the number one crop alongside coffee, guava, and taro.
Economy before 1778
Much of the history known about ancient Kauai's economy stems from archaeological discoveries and legends passed on by native families as the island remained undiscovered by the Western World until 1778. Historians believe Polynesian voyagers started inhabiting Kauai around 600 AD due to carbon dating found on materials around the island. The early settlers of Kauai clustered around the geographic locations which were suitable for fishing and agriculture. The main hub for Hawaiians on Kauai was the East side of the island now known as the Royal Coconut Coast. This was due to the fact that the land and climate was suitable for the growth of coconuts, taro, yams, and bananas.
The native Polynesians relied on a mainly subsistence economy in which there were no exchanges of currency. However, an explosive population growth around 1100 caused a systematic reorganization in the structure of their society due to resource scarcity. This led to the emergence of three main social classes: chiefs (ali’i), commoners (maka’ainana), and priests (kahuna). The ruling chief (ali’i nui) had complete control over the land and materials of their kingdom and possessed the power to redistribute the wealth at any time. Temporary land grants were loaned by the ali’i nui to the ali’i who had the common populace work on the lands. The maka’ainana cultivating the land paid labor taxes to the overseer of the land every week. This land relationship between the ruling class and the commoners was closely related to that of Europe's feudalism.
The society and economy in pre-1778 Kauai was mainly based around extended families (‘ohana). Families were believed to have worked cooperatively on an ahupua’a—a section of land that ran from the sea to the mountains. The Polynesians cultivated various different crops including tuber and tropical roots. Taro, yams, and sweet potatoes were also grown in various parts of the island. Hawaiians also domesticated dogs, chicken, Evidence suggests the maka’ainana were able to live well-above poverty levels and enjoyed various activities, games, and sports.
Over time, the economy of Hawaii as a whole became more complex over time. Families specialized in certain skills and islands became specialized in certain skilled trade. Although Kauai's isolated location made it harder for trade to occur, the islands did participate in the trading of fish, canoes, and bark cloth.
The changing economy
After their discovery by the British explorer Captain James Cook in 1778, Kauai and its surrounding islands became a popular destination for trade ships because of their convenient location in the Pacific Ocean. In addition, the Hawaiian King Kamehameha I unified the Hawaiian islands in 1810. These two factors signified a major shift in the economic structure of both Kauai and its sister islands. For the first time, Kauai shifted to a market economy with the introduction of money and international trade. The islands started exporting Sandalwood and trading with China for its tea. Hawaiians grew a liking to goods offered by Western countries and engaged in busy trade with both Europe and China. This lasted until the local forests on Kauai were stripped of all of its sandalwood.
In 1826, New England whaling ships began resupplying and getting fresh water in both Waimea and Koloa on Kauai . Because the whaling economy was one of the most profitable trades for Western traders in the 19th century, Kauai became a major re-provisioning and recreational center for trade ships.
By the 1850s, over 500 whaling ships were visiting Hawaii every year. This brought major trade and money flow to the islands until the industry's eventual decline due to the American Civil War through the 1860s.