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industrial structures could fit
together neatly, like pieces of
If the Triangle cities he January issue of Hous- a puzzle, with little overlap.
ton Business proposed that the A comparison of the cities’
are really a megalopolis, Texas Triangle metro areas of strengths indicated such indus-
Austin, Dallas/Fort Worth, trial complementarity exists,
divided into four parts Houston and San Antonio exist and statistical tests strongly
by geography and as distinct cities largely because confirmed the apparent com-
of Texas geography. With a plementarity is no illusion.
history, their long, navigable river reaching This article looks at the
the heart of the state or a deep same puzzle, but from a differ-
complementarity saltwater bay or other inlet ent angle. If the Triangle cities
implies we can add making Waco or Temple a sea- are really a megalopolis, divided
port, many of the roles played into four parts by geography
the four together and by the Triangle cities could and history, their complemen-
have been combined at a single tarity implies we can add the
approximate what location. Combining Houston’s four together and approximate
would have developed port, Dallas’ inland distribution what would have developed in
function, San Antonio’s reach that other reality with a long
in that other reality into deep South Texas and river or saltwater bay. If our
northern Mexico, and even the hypothesis is reasonable, we
with a long river or state’s political capital into one should be able to compare the
saltwater bay. place could have produced a industrial structure of the com-
Third Coast megalopolis to bined Triangle cities to New
rival New York, Los Angeles York, Los Angeles and the other
and Chicago. top U.S. metro areas, and its
The previous article also place in the hierarchy of U.S
suggested that the Triangle cities should be comparable.
cities did not develop inde- When we’re finished, we would
pendently, as proximity forced know whether the combined
Table 1
Economic Characteristics of Texas Triangle and Major U.S. Metro Areas, 2001
Texas Triangle cities would role in elevating local income those that cross international
constitute a megalopolis. levels. Even aside from the borders.)
cost-of-living figures, however, Table 2 lists all location
Comparisons we see that per capita income quotients greater than 1.15 for
Table 1 lists the nation’s six in the Texas Triangle is not that the Texas Triangle and the six
largest metropolitan areas, much different from Philadel- largest U.S. metro areas, indi-
ranked by population and total phia, Chicago and Los Angeles. cating industries that are 15
personal income in 2001: New To look at the industrial percent or more overrepre-
York, Los Angeles, Chicago, structure of the nation’s largest sented in the metro area com-
Washington, San Francisco and metro areas, we turn to the pared with a typical place in
Philadelphia.2 The combined location quotient (LQij ), defined the United States. The list is
Texas Triangle metro areas rank as as it was in the January article. based on wages, salaries and
No. 3 when inserted into the employer-paid benefits in 2000,
list, with 13.2 million people, percent share of income earned using the Standard Industrial
in industry i in city j
behind Los Angeles (16.7 mil- LQ ij = Classification system, in use
percent share of income earned
lion) and ahead of Chicago (9.3 in industry i in the United States until last year. About 60 indus-
million). The top cities are the tries were available in the Texas
same whether ranked by popu- If LQij is greater than 1, it indi- Triangle, for example.5 The list
lation or personal income, cates a larger than normal con- gives us a good idea of these
although Washington and San centration of activity in the city cities’ exports, important in
Francisco switch places, with (with “normal” based on a typi- defining the local economy
Washington one place ahead cal place in the United States) because exports generate the
based on population and San and that industry i is a likely income to pay for imports and
Francisco ahead on personal source of exports. If LQij is less support local activity.
income.3 than 1, the industry is not well
Table 1 shows wide dispar- represented in the city, and the Major Metro Profiles
ity in per capita income for the goods or services the industry Export industries in the
metro areas. San Francisco and produces are probably imported. Texas Triangle include oil (oil
New York stand at the top of For goods and services that are extraction, oil refining, com-
the list, and the Texas Triangle inherently local — dry cleaners modity chemicals), sophisti-
and Los Angeles are at the bot- and grocery stores, for exam- cated corporate services (engi-
tom. Where reasonable com- ple— the location quotient is neering and management
parisons could be found, cost- typically close to 1, as the services, business services),
of-living indexes are shown.4 goods or services are neither transportation (air transporta-
They strongly suggest that high exported nor imported. (Exports tion, water transportation, trans-
per capita income and a high and imports are defined as goods portation services), communi-
cost of living are related, and and services that leave or enter cations and wholesale trade.
high living costs may play a the metro area, not necessarily Financial strength is limited to
2
Table 2
Export Sectors in Major U.S. Metro Areas, as Indicated by Location Quotients
Texas Triangle. Oil and gas extraction (7.49); heavy construction (1.73); electronic and other electric equipment (1.54); chemicals and
allied products (1.21); petroleum and coal products (2.22); water transportation (1.32); transportation by air (1.71); transportation services
(2.52); communications (1.41); electric, gas, and sanitary services (2.15); wholesale trade (1.31); real estate (1.31); holding and other
investment companies (1.54); business services (1.17); miscellaneous repair (1.19); engineering and management services (1.20).
New York. Other forestry and fishing (4.19); apparel and other textiles (1.63); printing and publishing (1.70); chemicals and allied products
(1.76); local and interurban transportation (1.98); communications (1.37); apparel and accessory stores (1.42); depository and nondeposi-
tory institutions (1.47); security and commodity brokers (4.95); insurance carriers (1.28); insurance agents, brokers and services (1.20);
real estate (1.15); holding and other investment offices (2.74); private households (1.33); motion pictures (1.58); legal services (1.62);
educational services (1.33); social services (1.29); museums, botanical and zoological gardens (1.62); engineering and management
services (1.18).
Los Angeles. Furniture and fixtures (1.43); other transportation equipment (1.95); instruments and related products (1.84); miscellaneous
manufacturing industries (1.42); apparel and other textiles (2.71); petroleum and coal products (1.37); water transportation (1.87);
transportation services (1.63); food stores (1.61); apparel and accessories (1.25); home furniture and furnishings stores (1.24); real estate
(1.48); private households (1.90); auto repair and services (1.17); miscellaneous repair services (1.21); amusement and recreation services
(1.90); motion pictures (8.91); legal services (1.25); engineering and management services (1.70); local government (1.19).
Chicago. Primary metal industries (2.10); fabricated metal products (1.53); electronic and other electrical equipment (1.37); miscellaneous
manufacturing industries (1.22); food and kindred products (1.29); printing and publishing (1.41); chemicals and allied products (1.17);
petroleum and coal (1.30); rubber and miscellaneous plastics (1.37); transportation by air (1.48); transportation services (1.49); wholesale
trade (1.28); depository and nondepository institutions (1.28); security and commodity dealers (1.16); insurance carriers (1.30); holding and
other investment companies (1.18); business services (1.17); legal services (1.53); museums, botanical and zoological gardens (1.82);
membership organizations (1.19); engineering and management services (1.41).
Washington. Other forestry and fishing (13.1); business services (1.55); legal services (1.77); educational services (1.40);
social services (1.17); membership organizations (2.19); engineering and management services (1.94); federal civilian government (4.78);
military (1.99).
San Francisco. Industrial machinery (3.52); electronic and other electric equipment (3.36); instruments and related products (3.34);
petroleum and coal products (2.20); water transportation (1.21); apparel and accessories (1.58); home furniture and furnishings stores
(1.39); security and commodity brokers (1.50); business services (2.20); engineering and management services (1.36).
Philadelphia. Chemicals and allied products (3.66); local and interurban transportation (1.26); apparel and accessories (1.20); miscella-
neous retail (1.16); depository and nondepository institutions (1.40); insurance carriers (1.49); insurance agents, brokers and services
(1.43); hotels and other lodging (2.30); health services (1.21); legal services (1.46); educational services (2.12); social services (1.43);
engineering and management services (1.15).
NOTE: Location quotients are shown in parentheses; only LQs greater than 1.15 are shown.
SOURCE: Author’s calculations.
real estate and investment com- gion. The industries that re- national industries for the
panies. main after combining the Trian- largest U.S. metro areas: ap-
The most striking aspect of gle cities into a single metro parel and financial services in
the Texas Triangle list is that it area are true national indus- New York; movies, amusements
has only 16 export industries. tries, reaching outside the state and transportation services in
This compares with the 54 for to the rest of the nation. This Los Angeles; primary and fabri-
the cities separately: six in fall in the number of industries cated metals in Chicago; gov-
Austin, 14 in Dallas/Fort Worth, is one more indication of the ernment in Washington; high
15 in Houston and 19 in San deep-seated economic interde- tech in San Francisco; and
Antonio.6 The collapse in the pendence among the four health care and pharmaceuti-
number of export industries is metro areas. cals in Philadelphia.
the result of many of them The LQs work well in iden- Corporate services are an
serving only the Triangle re- tifying a predictable list of important feature common to
3
Table 3
Metro Area Participation in Exports, by Industry
(1 = this metro area exports that good or service, 0 = exports do not occur from this metro area)
the largest metro areas, with retail apparel shopping (New hurts its numbers, as deposi-
engineering and management York, Philadelphia, San Fran- tory and nondepository institu-
services the only export from all cisco and Los Angeles) and two tions, security and commodity
cities. Five cities export legal for retail home furnishings (Los brokers, and insurance carriers
services and four export busi- Angeles and San Francisco). all fail to make the list. Given
ness services. Financial services The Texas Triangle and Chicago the number of well-known
are strong in Chicago and New are centers for wholesale trade. Texas law firms, it is surprising
York, while Philadelphia and Does the Texas Triangle fit that legal services are not
San Francisco show strength in in this group as an exporter? exported. Also, legal services
some financial services. Wash- Table 3 lists all the industries tend to complement manage-
ington, Los Angeles and the that are exported from three or ment, engineering and business
Texas Triangle show little or no more of the seven cities. A 1 in services, which are strong in
strength in financial services the table means the city exports the state.
other than in real estate. goods or services from that in- The bottom line, however,
In manufacturing, both dustry; a zero indicates it does is that a combined Texas Trian-
petroleum refining and chemi- not. The totals on the right side gle provides a wide-ranging
cals are found in four cities. of the table indicate how many complement of sophisticated
Silicon Valley gives San Fran- cities export each industry, and urban exports on a national
cisco a strong tech sector, evi- the totals across the bottom basis. Even after regional
denced by exports of instru- show how many industries exports are canceled out, the
ments, electrical machinery and each city exports. number and composition of
nonelectrical machinery. The The Texas Triangle does not Texas Triangle exports com-
Texas Triangle and Chicago appear out of place on this list. pare favorably with those of
also export electrical machinery. It exports nine of these com- the nation’s largest metro areas.
Water transportation and mon urban exports, exceeded
transportation services are im- by 11 in Chicago and New What It Means
portant in two cities, as well as York. Philadelphia exports The Texas Triangle cities
the Texas Triangle. Air trans- eight, Los Angeles and San can be seen as parts of what
portation emerges as an export Francisco seven, and Washing- might have been a single giant
only in Chicago and the Triangle. ton–Baltimore five. The Trian- metro area in the heart of the
Four cities are meccas for gle’s lack of financial strength state had history and geogra-
4
phy been different. Still, the regional financial center could County; Chicago – Gary – Kenosha;
proximity of the pieces — Hous- not be more secure. Houston Washington – Baltimore; San Francisco –
ton, Dallas/Fort Worth, Austin Oakland – San Jose; Philadelphia –
has pined for diversification Wilmington – Atlantic City; Dallas – Fort
and San Antonio — forced them away from oil. San Antonio has Worth; Houston – Galveston– Brazoria;
to specialize in such a way that been accused of being too San Antonio; Austin – San Marcos.
they strongly complement each relaxed, allowing other urban 3
The Dallas and Houston CMSAs ranked
other. That complementarity rivals — especially Houston and number nine and 10, respectively,
allows us to add them together in 2001. Based on population, the
Dallas — to steal growth that Boston – Worcester and Detroit – Ann
for a reasonable approximation rightfully belongs in South Arbor – Flint CMSAs ranked number
of what the single Texas mega- Texas. Austin has leveraged its seven and eight. Table 1 of the
lopolis might have looked like distinctive charm to find itself January article contains comparable
had geography only cooperated. at the peak and trough of data for individual Texas Triangle
Adding the pieces of the metro areas.
every speculative bubble that 4
American Chamber of Commerce
four metros dramatically short- has moved through the state in Research Association, ACCRA Cost of
ens the list of metro exports. the past 30 years. Living Index, various issues, 2001 and
Individually, the four metros Our results suggest that the 2002. Data reported for New York
have 54 export industries, but personality differences are and Chicago were too limited in geo-
combined, the Texas Triangle graphic scope to make any metrowide
probably meaningless in terms comparisons. The comparisons that
has only 16. These remaining of their ability to greatly affect were available, however, indicate that
industries are national indus- the state’s economic develop- Chicago would stand a few percentage
tries, and those that disappear ment. At best, they are periph- points above the national average, and
have sales that occur only eral. At worst, the family rivalry New York would be well above the
within the Triangle. This last national average.
is a waste of resources in an 5
Nondisclosure of data is a recurring
observation is the flip side of uphill battle against deeply problem. Data are not disclosed in
the previous article’s conclu- rooted economic fundamentals. U.S. government publications unless
sion: The cities are economic Good news in Dallas or San there are three or more respondents in
complements, with strength in Antonio is good news for the the sector, or if one respondent is so
any one city matched by weak- large that its data dominate the results.
rest of the Triangle cities. And In a number of cases where nondisclo-
ness elsewhere. Growth in one because of the division of eco- sure was an issue, we used adjacent or
city stimulates growth in com- nomic roles across the Triangle, trend values to fill in and complete
plementary industries, many of it is generally futile for one of comparisons. This was especially true
which will be located elsewhere the cities to go head-to-head within the Texas Triangle, where any
in the Triangle. one nondisclosure out of four cities
with another one in its area of could eliminate a comparison. Few if
There is no question that economic strength. From this any of the inserted values were mean-
the Texas Triangle cities have perspective, it is difficult to see ingful to the results, other than to
developed their own personali- these cities as real economic allow a better picture of overall
ties. Dallas and Houston are rivals at all, and a strategy of results.
conservative and highly busi-
6
Export industries for individual Texas
cooperative, statewide develop- Triangle metro areas are in Table 2 of
ness-oriented; San Antonio is a ment programs makes much the January article.
more relaxed mix of agricul- more sense than competition
ture, the military and tourism. within the region.
Austin is music, high tech and
university life, set against the — Robert W. Gilmer
backdrop of state politics.
These personality differences, Notes
1
“The Simple Economics of the Texas
along with sibling rivalries,
Triangle,” Houston Business, January
breed their own intercity 2004.
squabbles. 2
The broadest definition of each metro
Dallas has long pumped area is used, normally the consolidated
itself up with the myth that it metropolitan statistical area (CMSA)
definition, except for Austin and San
has no economic reason to
Antonio, which are metropolitan statis-
exist and that it lives by its wits tical areas (MSAs). The definitions
alone, despite the fact that its used: New York– New Jersey – Long
niche as a distribution and Island; Los Angeles – Riverside – Orange
5
Houston
BeigeBook April 2004