Glenn Hegar
Texas Comptroller of Public Accounts
Glenn Hegar
Texas Comptroller of Public Accounts
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Glenn Hegar
Texas Comptroller of Public Accounts
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A Review of the Texas Economy

Current Issue (PDF)


Brookings Shines Spotlight on "Knowledge Capitals" in Texas

by David Bloom Published November 2016

Three Texas cities — Houston, Dallas and Austin — have gone global and are among the world’s 19 leading knowledge capitals, according to a recent report from the Brookings Institution’s metropolitan policy program.

Redefining Global Cities (PDF), released in late September, identified seven types of global metropolitan economies: Global Giants; Asian Anchors; Emerging Gateways; Factory China; Knowledge Capitals; American Middleweights; and International Middleweights.

“What distinguishes an Austin or a Dallas or a Houston from cities around the world is that they score quite highly in the area of innovation,” says Joseph Parilla, a fellow with the Brookings Institution and co-author of the forthcoming book Redefining Global Cities.

These cities’ major universities, medical facilities and leading corporations generate a great deal of scientific research that create local benefits and spill over, affecting the state, the nation and the world.

Texas’ knowledge capitals all have diverse economies, but also are home to unique industry clusters. Houston, unsurprisingly, is distinguished by its energy sector. Dallas is known for its telecommunications companies and as a logistics center. Austin has a burgeoning tech scene that has become increasingly attractive to giants such as Apple and Google.

Parilla says industry clusters are “the secret sauce to economic growth.” While no state or metro area wants its economy to become too specialized, since it might make them vulnerable to downturns in a particular sector, the goal, Parilla says, is “…a new, kind of wonky idea called ‘related variety.’”

So economic development professionals seek to grow new businesses and opportunities out of their unique economic “soil.”

“There’s been a lot of lost money when regions say ‘We’re going to become the next leading biotech hub,’ and it never works out if they don’t have the right environment,” he says. To extend the horticulture metaphor, Parilla adds that “figuring out what’s in your soil allows you to grow a flower adjacent to the one you've been growing for the last 20 years.”

So in a city such as Austin, at the forefront of computing and information technology, related sectors such as video game development can take root and flourish. That creates a “positive feedback loop,” Parilla says, and “once there’s a certain expertise in a region, either new entrepreneurial firms will be created out of that expertise, or companies that are looking for those types of workforce skills will say ‘Oh, there’s a cluster that is already there, let’s go be a part of it.’”

As recognized knowledge capitals on the world’s stage, Houston, Dallas and Austin are primed to continue germinating the types of innovation-dependent enterprises and activities that will shape the future. One of the benefits of the Brookings report, Parilla believes, is that it “helps places understand their category in this big, big world.” FN

For the complete report, see Redefining Global Cities. (PDF)