You sure about that being Hawaii? Look at the building in the background. It looks more ME/Africa to me. There seems to be some design on the window if that could be seen clearly. Someone who has the proper software might be able to pull out the name on the building - see there by his left foot. Can the colors of the two flags be brought out? I've done a quick search of historical buildings in Mombasa and Honolulu but didn't see anything close but that building could be anywhere.
I believe that bow of the the red and white boat visible under the Tiki hut is a traditional Hawaiian outrigger.
The outfit he is wearing looks like the same one he was wearing, perhaps on the same day, which was also at the beach, IIRC.
I won’t try to guess where that photograph was taken, all I know is we are MEANT to believe it was in Hawaii.
I tried all those things with no joy. The jpeg is too degraded.
There’s one more thing you can try that sometimes has interesting results. Go to http://www.tineye.com/, upload the image that you posted and this search engine will find all instances of that photo on the net that they have in their database. I did that and got 6 results. The best choice would be the heaviest KB photo for the highest resolution.
If lucky, you can find a higher quality image to use for examination. The first match I got was the same size as the one Fred posted but the page it used to be displayed on is now gone/scrubbed. It was low quality so no loss.
The highest resolution photo was actually cropped to a smaller physical size but with higher pixel density. No joy on that one either.
Finally, this search engine can be useful because you find the web sites where it has been used and you might find a useful caption or blog comment with it.
I visited the site that displayed the highest quality image. It was used with a sickening quote from The One. However, that page led me to this page via a link:
http://www.barack-obama-photos.com/Obama-Childhood-Photos.html
The photo is displayed on the above page with this caption:
“Barack Obama on Waikiki beach before his mother married Lolo Soetoro and moved with Barack and her new husband to Indonesia. Here, he’s in a lifeguard stand next to the famous pink Waikiki hotel, The Royal Hawaiian.”
Right next to the photo is another you will recognize with Barry in the same outfit. That caption reads:
“Child Barack on Waikiki
(Photo courtesy of Maya Soetoro-Ng)
Barack walks along Waikiki Beach shortly before he and his mother moved from Hawaii to Indonesia to live with her second husband, Lolo Soetoro, in 1967.”
In the above photo, there is a sail boat in the background with a Hawaiian looking name. Is it Hawaii? I don’t know.
I think the structure he is standing on is a lifeguard station, btw.
Royal Hawaiian Hotel...
http://www.royal-hawaiian.com/resort/history