Perry launches effort to help Texas compete
BYLINE: L.A. Lorek, EXPRESS NEWS BUSINESS WRITER
Gov. Rick Perry on Tuesday announced the creation of a competitive council designed to strengthen the state's economic development clout.
"Toyota came to Texas in spite of the state's inability at that time to offer meaningful incentives," Perry said during the closing keynote speech at the Texas Lyceum's conference at the Convention Center.
Toyota, which opens its $850 million Tundra truck plant Friday, is a key reason Perry established the Texas Enterprise Fund and the Emerging Technology Fund.
"Economic growth requires very strong collaboration between the private sector, the state and our educational institutions," Perry said.
The Governor's Competitive Council, which will begin meeting early next year, will bring together key leaders to create prosperity for Texans, he said. Its members will include industry leaders, representatives from key state regulatory agencies, economic developers and educators.
Perry's announcement will continue the efforts discussed at the two-day conference, Harnessing the Lightning: An Economic Growth Summit for Texas. The event focused on creating economic development through commercializing technology and supporting start-up companies.
San Antonio and Texas have made a lot of progress toward creating prosperity, but more work is necessary, said Michael Porter, a Harvard University professor and author of numerous books on competitiveness.
One of the state's biggest challenges is that its average annual wage of $36,161 lags the national average by 2 percent.
"Many other states are outperforming Texas," Porter said.
Its productivity also needs to improve, Porter said. Texas had a per capita annual growth rate of 3.57 percent between 1997 and 2005, ranking it 28th nationwide.
Competitiveness and prosperity depend on productivity, Porter said.
"It's not a bad performance," he said. "You've made a lot of progress, but there is a long way to go."
Universities need to produce more patents to compete so Texas can become one of the nation's high-wage states, he said. And Porter cautioned economic developers not to ignore the poorest communities in the state.
To enhance competitiveness, he said, regions need to create clusters. Economic clusters, such as the oil and gas industry, depend on one another for their success.
"Texas no longer exports very much oil and gas," Porter said. "You export knowledge. You export capital. That's much more valuable."
Texas' largest cluster is business services, followed by financial services, heavy-construction services, oil and gas products and services, and hospitality and tourism, according to Porter's research.
"High-tech and biotech are tiny in terms of jobs," Porter said. "Even if it doubles or triples, it's tiny. We've got to make sure we're aligning our economic development strategies with what's going on in the state."
The clusters creating jobs, Porter said, are business services and financial services.
In an interview after his speech, he said communities ignore service clusters because they think those jobs come with low wages.
"Services has this burger-flipping image that it's low-wage and old-economy, but we need to shift people's thinking," Porter said. "Our image of services is just dated."
Services account for 85 percent of the U.S. economy today, but the sector's importance is often overlooked, Porter said. It includes bankers, lawyers and accountants.
"If we focus on the manufacturing part of our economy and don't focus on the service part, then we are making a very big mistake," he said.
Henry Cisneros, chairman of CityView and former U.S. secretary of Housing and Urban Development, said San Antonio has done a good job creating clusters in manufacturing, biotechnology and tourism the past 20 years. That's resulted in new companies such as Toyota and its suppliers, he said.
"I think we're on the right track," Cisneros said.
David Spencer, chairman of the conference and the Texas Emerging Technology Fund, said he was shocked at the depth of Porter's presentation.
"We need to assess the participation in rural development areas," Spencer said. "We need to make sure economic development opportunities are available to everyone."