Texas is on Top Through the years, the Lone Star State has been a leader in countless endeavors, due in large measure to the unique capabilities of Texans to accomplish and achieve.
One of the areas in which Texas now ranks first is international trade as the state’s exports in 2002 of $95.4 billion surpassed California’s $92.2 billion, the traditional leader. In the interest of fairness, the dock strike on the West Coast last year played an important role in the Golden State’s slippage. In all likelihood, it may regain the top spot when the 2003 totals are counted. But being first now gives us a good opportunity to review where we are and how we might improve in the future.
In 2000, California had nearly $16 billion more than Texas in international shipments. In 2001, both states’ trade decreased; California experienced a 10.75% drop, and Texas saw an 8.54% decline. US exports of goods and services for the year similarly dropped, sliding 6.3%. In 2002, US exports were down about 2.5%, and imports rose some 3.8% for the year, increasing the nation’s trade deficit to a record high.
Last year the amount of California exports slipped again while Texas trade rebounded 0.42% to gain the lead among all 50 states. For the month of January 2003, Texas exports increased 11.02% while California had a decrease of 4.30%. These percentages represent exports of $7.96 billion and $6.85 billion for Texas and California, respectively.
Texas exports in 2000 were 13.3% of the US total, and for the year 2002, goods and services shipped from Texas amounted to 13.7%. In other words, for every seven and a quarter dollars in US trade, about one dollar was generated from exports originating in Texas. The proportion increased slightly in January 2003 as Texas exports represented 14.5% of US totals.
Mexico is the top trading partner for both the US and Texas. Approximately 45% of US trade to our southern neighbor goes through the Lone Star State with Texas products accounting for about 47% of that amount. Leading Texas exports are computer and electronic products, chemicals, appliances, and transportation equipment and non-electrical machinery. The other countries in the top ten receiving Texas goods are Canada, Japan, Taiwan, the United Kingdom, Brazil, Singapore, the Netherlands, Germany, and South Korea.
Everyday, some 12,000 trucks transport goods manufactured in Texas and the US across the Mexican borders. During the same time period, approximately 1,200 rail cars traverse the state’s six border crossings. Of the dollar value of the exports, the trucks carry about 90%, though the amount shipped by rail traffic is increasing.
Trade with Mexico has grown substantially since NAFTA. Food and agricultural products between the US and Mexico has doubled over the past decade with Mexico now the fourth-largest US export market for farm products. About 45% of the food and agricultural products crossing the border between the two countries is perishable.
The NAFTA-induced trade increases have naturally led to congestion at the various border entry points. The delay in reciprocal truck access amid concerns related to operational safety continues to plague the process. Investment in improving infrastructure and integrating the US-Mexico transportation systems will help stimulate trade and significantly benefit Texas. In fact, the technology of choice to track and regulate shipments at present is a pencil and a pad of paper.
Similarly, as greater numbers of Texas businesses embark on ways to create or increase trade opportunities with partners around the globe, Texas’ chances of remaining a top export state will be enhanced significantly. I’ll keep you posted on the progress of such endeavors.
posted @ 07:52 AM CST [link]
Friday, March 14, 2003
The Effects of Anticipation Spring is nearly here. It’s the season we’ve been anticipating for some time. Soon the snow and cold weather will just be memories. Our attention is being directed toward the annual return of beautiful flowers, basketball tournaments, and baseball training camps. This year, however, we’re also looking at the possibilities of lifestyle altering events.
As we go to press, war is looming on the horizon. The anticipation of that likely event, with its vast unknowns, is creating concerns and uneasiness. Evidence of this fact lies in the daily fluctuations in the market resulting from each new announcement related to troop movements, political support for America’s position or the lack of it, and projections of costs—both of a war and the aftermath of rebuilding.
Adding to this tenuous situation are reports that the economy is still suffering from anemia, and the timetable for its full recovery continues to be unclear. To boost the economy, information is now circulating that the Federal Reserve may soon cut interest rates again, which would put them at their lowest levels since Dwight Eisenhower was president. Such a move will have little impact; it would be dwarfed by the effects of eliminating the war uncertainty (whether we do so by going forward or not).
For several weeks, we have been experiencing the escalation of gasoline prices; they are already as high on average as they have been since May 2001. These spikes are not being caused by a shortage of oil, but by the anticipation that a shortage might occur. Unverified reports that the Iraqis are funneling explosives to their oil fields have escalated speculation that Saddam Hussein may seek to destroy his countries’ oil production infrastructure in the case of an American-led invasion.
Of course, gasoline price hikes are the most visible result of the anticipated oil shortage, but petroleum has many other purposes. It is used to heat and cool and is a part of plastics, fibers, pharmaceuticals, and many other products that we have come to rely on in our everyday lives. The longer prices stay high, the more escalation in the costs of other goods and services we can expect to see. The effect on jet fuel is also adding a nail to the coffin of major airlines.
So how big is the effect of war likely to be on oil supplies and prices? Let’s look at the possibility of the interruption of the flow of Iraqi oil more closely. There is plenty of oil in the world, and the OPEC group can easily adjust its operations to counter any loss of Iraqi oil from the market—even on a long-term basis. The US also has strategic reserves, as do many other countries; these could be accessed for near-term relief, though it is doubtful that the situation would require such actions on more than a minimal scale. Several other countries could (and would) also fill the gap.
In addition to the speculation that Iraqi oil production could be purposefully destroyed, there is the (remote) possibility of a massive embargo by oil-producing countries in sympathy with Iraq. That concept was discussed at a recent Islamic conference in Malaysia, but other that extensive rhetoric, nothing substantive resulted. Economic sense prevailed as major oil-producing countries have little desire to rupture relations with the US, the world’s largest oil consumer. In fact, they can’t afford to do so. An embargo would cripple them financially. Without the continual flow of oil money into their coffers, these nations could not achieve their long-range goals for trade and development.
Remember the supply reductions in the 1970s? Although they precipitated a global recession, they also caused acceleration in the development of new resources in the North Sea, Mexico, Canada, and elsewhere. As a result, OPEC lost ground in controlling the oil markets. With Russia, China, and others now waiting in the wings for their time on the stage, OPEC nations recognize the importance of maintaining the flow of oil.
Should anticipation about world oil supplies continue to linger and prices remain high, inflationary pressures can rise and dampen economic growth prospects. I believe, however, that regardless of the Iraqi situation, acceptable amounts of supply will be sustained and oil prices will be restored to equilibrium levels, possibly even a bit lower at first, as soon as the uncertainty ebbs. Markets are speculating about war, not looking at the basics of supply and demand.
Naturally, if we have a war, it will increase deficits (of real concern only to the degree that the resulting borrowing reduces private activity). The greatest impact of a war will be what occurs after it is over. If our nation and the “coalition of the willing” stabilize the area as promised, and political order is established, we can expect expanded trade, a less volatile energy market, and a climate more conducive to long-term investment. If we don’t, it’s not so pleasant.
posted @ 08:11 AM CST [link]
Friday, March 7, 2003
Forces Shaping Texas Economic Development The Texas Legislature is in the process of considering several measures affecting the future of Texas’ economic development. A review of the state’s economic strengths might be helpful in that regard.
The Lone Star State has many characteristics that shape its economic development agenda. Among those with profound influence on economic performance are the unique patterns in the state’s population. More than four million residents (over 22%) have been added over the last decade. Both natural expansion (births exceeding deaths) and in-migration contributed to this rise, and the trend (at a somewhat lower rate) is projected to continue well into the future.
The state has the youngest population in average age of the 10 most populous states, with its birthrates, average family size, and average household size all well above national norms. The demographic changes in Texas reflect in large measure the rapidly growing relative importance of the Hispanic population, particularly in South Texas and the border region.
The unique patterns in the Texas population have a profound influence on economic performance. On the one hand, a continuation of current disparity in education and earnings among ethnic groups leaves the state with daunting challenges and the prospect of declining living standards and per capita incomes. On the other hand, a young and growing labor force can be an enormous asset in attracting new activity, particularly as the aging “baby boom” generation begins to retire and a shortage of skilled and experienced workers persists. This situation can be vied as “good news” or “bad news”—a challenge or an opportunity—but it definitely shapes the proper direction of policy. Overall, the availability of people to contribute to the economy is clearly positive; equipping them to do so effectively is a necessity.
Other strengths of the Texas economy include its location, climate, heritage, infrastructure, favorable costs in several categories, concentration of production in areas likely to foster growth and diversity, and endowments of key resources and assets.
The state is situated in the Sun Belt and in the central part of the country with access to all parts of the US and key markets in Europe and Asia. The extensive border with Mexico and location along major highway corridors also benefit business conditions in Texas.
Rail access across the US is also available (more than 12,000 miles of track), with international air service from eight airports and numerous other excellent facilities. Dallas/Fort Worth International Airport is among the busiest in the country, and Fort Worth Alliance Airport is the first such facility to be designed exclusively as a business airport; it has been a source of enormous economic expansion since it opened in late 1989. The state has 13 deep water ports, as well as other seaports and linkage to the Gulf Intercoastal Waterway. The Port of Houston is the nation’s busiest port.
In addition, Texas has advantages related to some important elements of cost. Housing and real estate are less expensive than in many competing markets, as are wage rates and construction, transportation, and power costs. Although rankings vary across individual categories and states are different depending on the specific needs of each sector, Texas is generally competitive with regard to basic operating costs.
The state is also blessed with a wealth of natural resources. For much of its history, the economic focus was on natural resources such as rich deposits of oil and gas, fertile agricultural land, and wide-open spaces for livestock. Today, resources include science and engineering programs at major universities, research capacity, major medical facilities, and a large high-tech output and employment base.
Texas gained in excess of 150,000 high-tech jobs in the 1990s and created more total net new employment than any state in the country. The number of high-tech workers now exceeds 500,000 (despite recent layoffs) and the Lone Star State boasts such prominent facilities as Sematech, the Johnson Space Center, and highly acclaimed public and private research institutions in many emerging fields. Texas enjoys multi-billion dollar annual levels of research and development activity, a major technology incubator, and effective technology transfer mechanisms.
All of these factors have contributed notably to the positive economic performance of the state in recent years and bode well for the future. Lawmakers should keep these in mind as they craft, debate, and pass laws shaping the future economic development directions of the state.
posted @ 08:26 AM CST [link]
Forces Shaping Texas Economic Development The Texas Legislature is in the process of considering several measures affecting the future of Texas’ economic development. A review of the state’s economic strengths might be helpful in that regard.
The Lone Star State has many characteristics that shape its economic development agenda. Among those with profound influence on economic performance are the unique patterns in the state’s population. More than four million residents (over 22%) have been added over the last decade. Both natural expansion (births exceeding deaths) and in-migration contributed to this rise, and the trend (at a somewhat lower rate) is projected to continue well into the future.
The state has the youngest population in average age of the 10 most populous states, with its birthrates, average family size, and average household size all well above national norms. The demographic changes in Texas reflect in large measure the rapidly growing relative importance of the Hispanic population, particularly in South Texas and the border region.
The unique patterns in the Texas population have a profound influence on economic performance. On the one hand, a continuation of current disparity in education and earnings among ethnic groups leaves the state with daunting challenges and the prospect of declining living standards and per capita incomes. On the other hand, a young and growing labor force can be an enormous asset in attracting new activity, particularly as the aging “baby boom” generation begins to retire and a shortage of skilled and experienced workers persists. This situation can be vied as “good news” or “bad news”—a challenge or an opportunity—but it definitely shapes the proper direction of policy. Overall, the availability of people to contribute to the economy is clearly positive; equipping them to do so effectively is a necessity.
Other strengths of the Texas economy include its location, climate, heritage, infrastructure, favorable costs in several categories, concentration of production in areas likely to foster growth and diversity, and endowments of key resources and assets.
The state is situated in the Sun Belt and in the central part of the country with access to all parts of the US and key markets in Europe and Asia. The extensive border with Mexico and location along major highway corridors also benefit business conditions in Texas.
Rail access across the US is also available (more than 12,000 miles of track), with international air service from eight airports and numerous other excellent facilities. Dallas/Fort Worth International Airport is among the busiest in the country, and Fort Worth Alliance Airport is the first such facility to be designed exclusively as a business airport; it has been a source of enormous economic expansion since it opened in late 1989. The state has 13 deep water ports, as well as other seaports and linkage to the Gulf Intercoastal Waterway. The Port of Houston is the nation’s busiest port.
In addition, Texas has advantages related to some important elements of cost. Housing and real estate are less expensive than in many competing markets, as are wage rates and construction, transportation, and power costs. Although rankings vary across individual categories and states are different depending on the specific needs of each sector, Texas is generally competitive with regard to basic operating costs.
The state is also blessed with a wealth of natural resources. For much of its history, the economic focus was on natural resources such as rich deposits of oil and gas, fertile agricultural land, and wide-open spaces for livestock. Today, resources include science and engineering programs at major universities, research capacity, major medical facilities, and a large high-tech output and employment base.
Texas gained in excess of 150,000 high-tech jobs in the 1990s and created more total net new employment than any state in the country. The number of high-tech workers now exceeds 500,000 (despite recent layoffs) and the Lone Star State boasts such prominent facilities as Sematech, the Johnson Space Center, and highly acclaimed public and private research institutions in many emerging fields. Texas enjoys multi-billion dollar annual levels of research and development activity, a major technology incubator, and effective technology transfer mechanisms.
All of these factors have contributed notably to the positive economic performance of the state in recent years and bode well for the future. Lawmakers should keep these in mind as they craft, debate, and pass laws shaping the future economic development directions of the state.
posted @ 08:26 AM CST [link]