In the 21st century, technology will continue to grow in its role in our daily lives. The sophistication of the gadgets we carry in our pockets far surpasses anything that could have been conceived of mere decades ago, and the future is likely to hold even greater advancements. The predominance of technology is not limited to the everyday use by consumers, but is increasingly a key engine for growth in national and state economies, particularly Texas.
Technology attracts new businesses to the state, adds to state exports, and represents a key generator of high-paying jobs. However, the recent slowdown has proven without a doubt that technology-related industries are far from an automatic answer to every economic ill. It is important for Texans to understand the impetus for the 1990s technology boom in the state economy and the more recent contraction in order to plot a course toward ensuring Texas remains at the forefront of the new high-tech economy of the 21st century.
High-tech industries in Texas are centered predominantly around two metro areas, Dallas and Austin, although other cities are increasingly attracting technology firms. Dallas has the third largest number of high-tech jobs nationally (following San Jose and Boston). Numerous substantial technology companies, including Texas Instruments and a multitude of telecomm concerns, contribute to the Metroplex’s position as a center for high-tech industry.
Austin has established a technology economy that is predominately focused on three categories: semiconductors and electronics, computers and peripherals, and software. Austin is also in the process of developing more industries with a significant technology component such as biomedical products, film and music, multimedia, and transactions services.
The development of the high-tech economy in Texas can mostly be attributed to the technology boom of the early to mid-1990s. Between 1994 and 2000 alone, Texas high-tech employment increased by 52%. The growth in high-tech industries began to decline in 2000, with the burst of the technology bubble. In 2001, Texas high-technology employment decreased about 1% (3,000 jobs); even more severe declines were observed in 2002, and momentum is only now beginning to surface.
Despite the recent downturn, Texas is still at the forefront of the high-technology economy. Texas ranks second in the country in semiconductor manufacturing employment (48,600), computer and office equipment manufacturing employment (35,800), and data processing and information services employment (45,900). Texas ranks third in software services employment (71,100) and in communications equipment manufacturing employment (33,400).
While the Lone Star State has seen great advancements in the technology-oriented sectors of the economy, this is not a time for complacency. In order to guarantee future growth, workforce development is crucial to meeting the demands of high-technology firms in the state. The recent slowdown led many firms to downsize in order to cut costs, other firms have increasingly sought cheaper labor outside of Texas and the United States. However, as economic recoveries in key trading nations gain momentum and excess capacity conditions are resolved, the demand for tech products will grow. With this growth will come a need for specialized and highly trained employees.
While the Texas Legislature has taken several steps toward enhancing the quality of the workforce, more emphasis on specialized training will be needed in the future. In addition to education and training issues, Texas must increase incentives for high-technology firms to relocate here. The state has made great strides in this direction, but still falls short of what is available in other, competing states in numerous instances. This is particularly crucial in the emerging technologies sectors.
One such sector in which the state is poised to benefit is biotechnology. Texas possesses many of the underlying elements necessary to establish a flourishing biomedical industry. In order to become a major biotechnology center, Texas must leverage the scientific base and become the leader of innovation and commercialization of biotechnology.
Without a doubt, technology companies have revolutionized the Texas economy, particularly for specific regions. The business activity generated by these firms in turn benefits a wide variety of other industries. While investment and employment are down notably from the levels of the late 1990s, technology-oriented firms remain one of the key engines for future growth. In particular, the newer emerging technologies (such as biotechnology, nanotechnology, next generation semiconductors, and others) stand to be the source of tremendous economic gain. It is imperative that Texas be well-positioned to become a center for these new fields.