World Trade Makes Texas a Global Player

by Bruce Wright

You may not be interested in globalization – but globalization is interested in you.

Even if you never travel beyond the county line, you're surrounded by products from around the world, from the TV in your living room to the clothes on your back. And if you've got a job in Texas, chances are good that your livelihood is linked, directly or indirectly, to our trade with foreign nations.

International trade has been going on for as long as nations have existed, of course. But never before has it been as extensive as it is today.

Globalization, defined broadly, is simply the reduction and removal of barriers to the free flow of goods, services and information among nations. Such barriers have been disappearing rapidly in the last few decades, creating an unprecedented flow of worldwide trade and the beginnings, at least, of a single global market.

The rise of the globally interconnected economy has been controversial at times, and, as with all major economic shifts, has not been without pain. But globalization has expanded the range of goods and services available to all consumers while lowering their costs, and created new markets and new economic opportunities for U.S. companies.

And Texas in particular has reaped major benefits.

Top Exporter

Texas has been the nation's No. 1 exporting state since 2002, due not only to its own business activities but also to its position as a major national hub for sea, land and air transportation.

Mexico remains our largest trading partner; our neighbor to the south received $72.6 billion in exports from Texas in 2010. Another partner and neighbor, Canada, was second, receiving $18.8 billion in Texas exports in the same year. But third-ranked China and other emerging economies around the world are becoming increasingly important to our state's exporters.

According to the International Trade Association, Texas's export shipments of merchandise in 2010 totaled $207 billion. That directly translates into Texan jobs. International Trade Association figures indicate that more than a quarter of all Texas manufacturing jobs were linked to international trade in 2009.

Texas companies are heavily committed to world markets. ITA reports that more than 26,000 companies exported goods from Texas in 2008. Interestingly, 92 percent of those – 24,294 companies – were classified as small and medium-sized enterprises with fewer than 500 employees.

"Globalization allows the smallest of firms to play a role," says Ebetuel "Beto" Pallares, executive director of the TransPecos/El Paso Regional Center of Innovation and Commercialization. "It allows for specialization and a faster pace of growth."

Doorway to the Nation

Texas seaports, airports and the inland ports on the Mexican border are among the nation's busiest destinations for imports, which benefit state industries related to transportation and warehousing, among others. Texas port activity rose nearly twice as fast as the nation's between 1997 and 2009.

U.S. Department of Transportation (DOT) statistics for 2008 (most recent available data) indicate that Texas ports received more waterborne foreign shipments, as measured in tonnage, than any other state, accounting for more than 26 percent of all such shipments received in the U.S. in that year.

Texas also dominates surface (truck and rail) trade with Mexico, receiving about $38.9 billion in imported merchandise from our southern neighbor via these means in 2009, or more than a quarter of the U.S. total.

In 2010, Texas received more than $302 billion in imports. The most common import by far was oil and petroleum products, with a total of $105.1 billion for the year. The miscellaneous electrical machinery and computers category was second, at $93.6 billion.

Good Investments

Texas businesses also benefited from increasing foreign investment. Despite the global recession, global capital has continued to flow towards Texas. During the two year period 2009-2010, more foreign direct investment projects were recorded in Texas than in all four previous years combined. In 2008 (most recent data available), foreign companies employed 439,400 workers in Texas, including more than 156,000 manufacturing workers.

Attractive Talent

A bigger factor in Texas' success in foreign trade, however, may be a highly educated work force.

Texas workers can't compete with their counterparts around the world on wages alone, since the U.S. is a relatively high-wage nation. The quality of the worker, then, becomes all-important, both for exports and foreign investment.

This is particularly true in Texas' burgeoning high-tech manufacturing sector. In 2009, computers and electronic products were the state's biggest export, with a value of $32.1 billion. The Dallas Federal Reserve estimates that 37.7 percent of Texas jobs related to computers and electronic equipment depend on exports.