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Texas Politics - Political Economy
Mark White on the evolution of the Texas economy Mark White on the evolution of the Texas economy
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How Texas ranks among world economies How Texas ranks among world economies
Per capita gross state product, 1977-2004 Per capita gross state product, 1977-2004
3.    The Modern Texas Economy

The popular image of the Texas economy has been symbolically defined by the primary goods - agriculture products and mineral resources - that dominated the state through most of its history. From the Civil War through the 1920s, cotton was the undisputed king, and cotton production came to symbolize the commercial agriculture business that dominated the early Texas economy. Agriculture, of course, never disappeared from Texas, but its preeminence was challenged and ultimately eclipsed by the petroleum industry as the oil age dawned. The state's oil reserves propelled the creation of a whole new industrial complex, and with it, new wealth.

The energy sector remains prominent among Texas industries, as do ranching, agriculture, and agriculture-related industries like cotton ginning. But other industries such as travel and technology (including computers, aerospace, and telecommunications) have grown dramatically, challenging the supremacy of traditional economic activities.

Part of the success of these industries derives from the fact that have enjoyed considerable encouragement and dollars from the federal government - particularly the aerospace industry. National and even international politics played important roles here. The arms and space races with Cold War foe the Soviet Union led to creation of the NASA facility near Houston. In turn, the aerospace industry has spawned growth in related industries such as telecommunications, information technology, and the airline industry and travel reservations industries.

The state's position in both the national and international economy has evolved in ways that have contributed to the transformation of its internal politics as well as its position in national and even international politics and economics. The Texas of the nineteenth and early twentieth century fit the profile of much of the South and Southwestern regions that is straddles. Texas was a moderately populated producer of primary goods and commodities situated in a largely dependent relationship to the more developed and industrialized northeast. The global embrace of oil helped propel Texas into a more prominent national and international role, though not without costs the state still feels. If Texas now ranks among the largest economies in the world, the legacy of its years of dependence on the production of commodities endure and is still in evidence. The oil crash of the mid-1980s sent the state into a prolonged economic downturn that caused multiple business failures, high unemployment, and regional real estate crashes. The severe repercussions of the downturn in the oil industry illustrated how Texas still bore similarities to late-developing nations. Such nations often depend on a single extractive or commodity industry, which leaves them highly vulnerable to economic booms and busts as the pricing for that commodity fluctuates. As the excerpt from our interview with former Governor Mark White illustrates, the downturn severely affected the state budget and state politics. This chapter's Thinking Comparatively chart Boom and Bust or Steady Growth? compares growth in the Texas Economy with other states, and also plots the decline of the importance of oil and gas in the Texas economy.

Despite this legacy, the state's economy has undergone a profound transformation and diversification that began - if slowly at first - in the 1950s. By the turn of the new century, the Texas economy has matured into a more dynamic, diverse and complex structure, much better equipped to withstand the buffeting of the increasingly globalized nature of economic transactions.

Texas Politics:
© 2009, Liberal Arts Instructional Technology Services
University of Texas at Austin
3rd Edition - Revision 115
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