INTRODUCTION
Would you like to learn about what made Texas's economy strong? Do you want to understand why Texas is so successful? Well, you're in the right spot! Let's explore the reasons that have helped Texas proliferate.
LONE STAR STATE
Texas is called the Lone Star State, because of its former status as an Independent Republic and as a reminder of the State's struggle for Independence from Mexico. The name originated because of the golden star on the blue background (1836 Flag of the Independent Republic), known as the "National Standard of Texas".
The term "Lone Star" represents the unity of the state as one for God, State, and Country. The Lone Star can be found on the Texas State Flag, and on the Texas Seal. This nickname became the official nickname, when the Texas State Governor Abbott signed a Concurrent Resolution No 78 on June 19, 2015.
Do you know? A Concurrent Resolution is a type of resolution that is passed by both houses of a legislature but doesn't require approval of the executive branch. These types of resolutions sometimes are mere opinions of the legislature on an existing issue or sometimes could be minor changes to the law.
The Executive branch is a powerful branch of the Texas government, but it is not all-powerful. This branch is responsible for carrying out the laws that are passed by the Texas Legislature. The Texas Executive branch is headed by the Governor of Texas, who is also the commander-in-chief of the Texas National Guard. Other members include the Lieutenant governor of Texas, the Attorney general of Texas, the Comptroller of Public Accounts, the commissioner of the General Land Office, and the Railroad commissioners.
The Texas legislature has the power to pass the laws and the Texas Supreme Court has the power to Interpret the laws. The executive branch must work within the boundaries of the Texas Constitution.
Texas state is surrounded by four states, namely New Mexico to the Northwest, Oklahoma to the North, Arkansas to the Northeast, Louisiana to the East, and the Gulf of Mexico along the Southeast with a coastline of 367 miles or 591 kilometers, Mexican country States on the South and Southwest sides.
Texas is the second largest state in the United States of America covering anywhere between 261,232 square miles to 268,581 square miles, which is about 1000 miles by road from one end to another. From North to South, Texas extends about 801 straight-line miles. From East to west, Texas extends about 773 straight-line miles, which is about 1000 miles by road.
DEMOGRAPHICS
Do you know? Demography is the quantitative study of a population, based on its size, structure, distribution, and other vital statistics.
As per the statistics, the Texas population as of,
July 01, 2022: 30,029,572.
July 01, 2021: 29,558,864.
July 01, 2020: 29,232,474.
As per the reports, there were more than 902 Texans moved to Texas every day between 2020-2021. There were more than 1290 Texans moved to Texas between 2021-2022. So, in the span of 10 years (2010-2020), there are approximately 3,999,994 Texans moved to Texas attributing to the growth of 95.3% of minorities.
To conclude this, as of 2022, Texas has approximately 39.4% Whites (Non-Hispanic), 40.2% of Latinos or Hispanics (Any race), 11.6% of African Americans, 5.1% of Asians, 0.2% of American Indians or Alaskan Natives, 0.1% of Native Hawaiian or other Pacific Islanders, rest some other races.
TEXAS COMPARED TO OTHER COUNTRIES
Texas is twice in area when compared to Japan and is about 10% more in area when compared to France. If Texas were a separate country, then it would be the 43rd largest country next to Zambia and Chile.
LARGEST CITIES OF TEXAS
The abundance of larger cities in a state is an important growth factor that drives the state's economy. Texas has more big cities per capita than any other large state in the USA. Texas has over 2 million residents spanned across five metropolitan areas. Dallas-Fort Worth-Arlington Metro and Houston-The Woodlands-Sugar Land Metro are ranked among the top 6 largest cities in terms of economic output and population. In fact, Texas is the only state that has two metropolitan areas in the category of the largest cities.
Do you know? Texas state was able to recover quickly from the great recession and double its GDP compared to that of the nation's GDP, because of the state's favorable economic factors.
GDP means Gross Domestic Product and it represents the total value of the goods and services produced within the state or country's limits over a specific period. GDP is of two types, Nominal GDP, and Real GDP. Nominal GDP is calculated without considering Inflation, while Real GDP is calculated by considering Inflation into account.
NOMINAL GDP Let's say in 2022, Texas produced 1000 mangoes and sold each mango for one dollar, Also the state produced 2000 avocados and sold each for two dollars. The Nominal GDP is then calculated as (Product Price 1 X Product Quantity 1) + (Product Price 2 X Product Quantity 2) + ……... + (Product Price N X Product Quantity N). In this scenario, Nominal GDP is ($1 X 1000) + ($2 X 2000) = $5000.00
REAL GDP From the above example, let's pretend that the Base Price to produce mangoes is $1 and the Base Price to produce Avocados is $2. In 2023, Texas has produced 1500 mangoes and 2500 avocadoes. Now, the Real GDP is calculated as (Product Quantity 1 X Base Price 1) + (Product Quantity 2 X Base Price 2) + …. + (Product Quantity N X Base Price N). In this scenario, Real GDP is (1500 X $1) + (2500 X $2) = $6500.00
IMPORTANCE OF CITIES
This is the age of cities. Globalization brought everything and everywhere together and easily reachable. Cities were the heart and soul of the countries in the 19th century and in the 20th century. They have been rockstars of history even before Babylon: which was the cradle of civilization, Florence: Which was the origin of the Renaissance, Birmingham: Which was the home of the Industrial Revolution, and Athens: Which was the birthplace of Democracy.
Cities were and are centers of population, trade, financial markets, and employment opportunities.
Examples: Dallas, Houston, New York, Los Angeles, Chicago, and Atlanta. These cities are dense areas filled with people. This leverages the existing and newly co-located industries and other organizations to take advantage of the agglomeration, which means these industries have easy access to labor and transportation at a low price, which can save them a lot of money.
Examples are, Houston is known as a hub for the bulk oils and gas sectors, and Silicon Valley is based on the Hi-Tech Information Technology sectors.
Do you know? Agglomeration means a gathering of masses or a combination of different things.
Cities with characteristics such as location, natural resources, and labor force/people can contribute to their long-term economic performance, even during bad times. Apart from these, an Industry mix and Industry agglomeration are other factors that can help boost and/or become an economic powerhouse. The reason is that the clusters of industries employ various skilled workers and produce several goods and services depending upon the market demands. These dominant clusters employ various technologies and invest in any related research and development. These factors can help sustain a country for a longer period, attracting new business and investments in those areas, enhancing productivity, and spurring innovation.
How do you assess key drivers in an area's economy?
Firstly, an area must have an economic base, where all the developments, financial transactions, trades, and manufacturing happen. For these to happen, there must be a cluster of dominant industries and these clusters can be from various sectors. Some may manufacture, some may deliver, some may provide services, and so on.
When these cluster of industries exceed the national average in their share of employment, output, and earnings, then the Location quotients exceeds 1 (LQs). This means the industry cluster dominates locally rather than nationally.
Do you know? Location Quotient (LQ) measures the relative concentration of the dominant industry clusters at local and national levels.
LQs are calculated based on Industry cluster employment and wages. Industry cluster growth is measured by the percentage point of local employment and wages over a period or between a specific period.
INDUSTRY CLUSTERS
Industry clusters in an area are a group of interdependent and interrelated sectors. These sectors can be based on the NAICS.
Do you know? NAICS means North American Industry Classification System.
Examples:
Silicon Valley, Bay Area, California: This area comprises technology-based companies such as Tesla, Apple, Facebook, Salesforce, Oracle, and venture capital firms that invest in these companies and startups.
Detroit, Michigan: Referred to as 'Motor City' is the home for big auto manufacturing companies such as Ford, General Motors, and Chrysler, to name a few, and dependent businesses such as suppliers, chip manufacturers, technology outsourcing companies, parts-related businesses, and so on.
Hollywood, California: Southern California boasts entertainment industries also called Hollywood, which consists of Universal Studios, Disneyland, 21st Century Fox, and many more—also, home to the Music industry as well as dependent industries.
Toronto-Waterloo: Second largest tech cluster in North America with diverse sectors such as financial, technology, manufacturing, publishing, printing, transport, and logistics.
Texas: Texas is home to Oil and gas production companies situated in Houston and there you can find all dependent transportation and logistics companies, distribution companies, and many more. Austin is becoming a hub for Information technology sectors.
TYPES OF INDUSTRY CLUSTERS
Base clusters have a larger share of local employment relative to that of the Nation, thus exceeding a Location Quotient (LQ) of 1. Base clusters may have a major impact in a negative and positive way on the local areas. The local industry-dominant clusters may grow rapidly, may decline, may grow slowly, or may stay flat.
Do you know? Experts have classified the Base Cluster into several categories, Star and Emerging means rapidly growing sectors. Mature and Transitioning means growing slowly or declining sectors.
The Houston, Dallas, Austin, and San Antonio metro areas each have their dominant clusters that drive their respective economies.
Houston Metro Area
Houston is home to dominant Industry clusters such as Oil and Gas refineries, Energy services, Chemical Industry, and related Industries such as Petroleum pipeline industries, Oilfield equipment construction industries, Refining and Petrochemicals, and Renewable energy, hence known as Nation's Energy Capital.
Due to the discovery of Oil and Gas deposits in 1901, from the mid-1970s to the early 1980s, Houston City has experienced significant growth fueled by the oil industries.
Houston employs nearly a third of the nation's jobs in oil and gas extraction and is home to over 4,700 energy-related firms. As of 2017, about 12%+ of the local workforce has been employed by the energy sectors in the Houston Metropolitan area.
Because of its business-friendly environment, Houston city has brought a good amount of Tax Revenue into the city which has helped to create many opportunities for energy-related interdependent and interrelated businesses. Also, because of its proximity to the port attracted many energy and other sectors to establish their presence in the Houston metropolitan area.
Hydrogen Hub
One of the Nation's seven clean regional hydrogen hubs is located on the Gulf Coast of Texas. The U.S. Department of Energy made this decision and made Houston the operations center. Sixty Percent of the nation's dedicated hydrogen pipelines are in Greater Houston. The Hyvelocity hydrogen hub will connect more than 1000 miles of pipelines, 48 production facilities, and dozens of hydrogen-end-use applications across Texas. This technology and Project are backed up by AES Corporation, Air Liquide, Exxon Mobil, Chevron, Mitsubishi Power Americas, Orsted, and Sempra Infrastructure.
Dallas Metro Area
The Dallas-Fort Worth Metro area boasts several excellent universities, including the University of Texas at Dallas, the University of North Texas at Dallas, Texas A&M University at Dallas, and Southern Methodist University. These institutions contribute significantly to the economy of the Dallas-Fort Worth Metro area by producing graduates of great caliber. Additionally, Dallas is home to some of the big tech giants such as Texas Instruments, AT&T, and many more, making it a hub for technology and innovation.
CompTIA Year-2023 State of the Tech Force shows that Dallas added an estimated Net Tech employment of 329,347 jobs, a total of 14,010 jobs (+4.4%) alone in the year 2022, an estimated 12,680 Tech jobs (+3.8%) in 2023. As per the report, the Dallas-Fort Worth metro area is ranked 6 in the top metros by net tech employment, 2nd rank in Net Tech Employment Jobs added, 34th rank in Tech Business establishments % change rank, in 1st diversity index quartile.
Austin Metro Area
Austin is a leader in the Semiconductor and Electronics R&D and manufacturing. It has emerged as a thriving tech hub due to various factors contributing to its rapid growth and development. The City's top-rated Universities, Strong talent pool, favorable business environment, and vibrant start-up ecosystem attracted several top technology companies and entrepreneurs worldwide.
CompTIA Year-2023 State of the Tech Force report shows that Austin added an estimated Net Tech Employment of 173,629 jobs by 2022 and 183,371 jobs by 2023, which is 14.1% of the overall workforce. In 2022 the city added +10,795 jobs (+6.6%) and an estimated of +9,742 (+5.6%) by 2023. Austin is in the 1st Diversity Index Quartile, 5th in Net Tech employment jobs added, 11th rank in Net Tech employment, and 26th rank in Tech Business establishments % Change.
San Antonio Metro Area
The San Antonio - New Braunfels metro area boasts several industry clusters such as Aerospace, Information Technology, Cybersecurity, Healthcare, and Bioscience. As of the 2020 census, San Antonio is the 7th largest state in the U.S. Biotech companies and healthcare companies contribute billions of dollars to the local economy.
CompTIA Year-2023 State of the Tech Force report shows that San Antonio added an estimated Net Tech Employment of 51,200 jobs by 2022 and 183,371 jobs by 2023, which is 4.6% of the overall workforce. In 2022 the city added +1,351 jobs (+2.7%) and an estimated of +1,648 (+3.2%) by 2023. San Antonio is in the 1st Diversity Index Quartile, 26th in Net Tech employment jobs added, 35th rank in Net Tech employment, 35th rank in Tech Business establishments % Change.
Do you know? Diversity Index Quartile is based on Simpson’s Diversity Index. Simpson's Diversity Index is a measure of how diverse a community is, based on race and ethnicity. It considers both the number of different groups represented (richness) and how evenly these groups are represented (evenness). A higher Simpson's Diversity Index represents a more diverse community, which can lead to increased innovation, better decision-making, and improved customer service.
CONCLUSION
Based on the facts, it is evident that Texas is currently experiencing a significant economic boom, which is expected to continue. Thanks to its business-friendly government, many companies are expressing interest in relocating to Texas and providing employment opportunities to its residents. This is great news indeed! Kudos to Governor Greg Abbott of Texas, who has made significant contributions to the state's growth. Based on expert reports, Texas is poised for continued growth in the future.
Citations:
https://demographics.texas.gov/Resources/Presentations/OSD/2023/20230411_MesquiteLeadership.pdf
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