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


On Point with Bob Harvey,President and CEO of the Greater Houston Partnership

by David Bloom Published December 2016

In early November 2016, we chatted with Bob Harvey, president and CEO of the Greater Houston Partnership, who was part of a city delegation that traveled to Washington, D.C., for the Brookings Institution’s announcement of its global cities findings.

On what it means for Houston to be on the Brookings list of global “knowledge capitals”:

We were very pleased when Brookings came out with this new category. It’s certainly appropriate and gratifying, because that’s how our city views itself these days. It recognizes the progress we’ve made in Houston toward becoming a true innovation economy. [The recognition] is extremely helpful, because talent wants to go where other talent is. And it helps us make the case to people around the country and around the world: “Come to Houston. Bring your business to Houston. Start your career in Houston. Grow your business here in Houston.”

On why Texas is home to three “knowledge capitals” (Houston, Dallas and Austin):

Texas has many attributes that facilitate the development of knowledge capitals. One is the ease of doing business here. That stems from state policies and laws that make it attractive to create businesses in our cities. We’re also a low-cost place to live and do business, and that’s pretty much a statewide attribute. We also benefit from our statewide system of higher education. We’re fortunate in Houston to have Rice University and the University of Houston, two Tier One institutions.

The proximity of the state’s knowledge capitals benefits all of us. Our service firms in Houston support businesses in Dallas and Austin and vice versa. All you have to do is look at the traffic on I-35 or I-45 on any given day to see how integrated we are.

On what Houston is learning from Brookings and other knowledge capitals:

At the highest level, the message Brookings imparts is leadership. It’s the idea that you have to take control of your own destiny. A city has to decide what its needs are and how it’s going to address them. We can’t be looking to national government, in particular, and to some extent not even state government.

We’ve got to identify what our issues are and address them ourselves, for the most part. And that message has really permeated Houston. Often, that means finding our own way to finance solutions, and not waiting for some government grant. You have to look for private financing or some combination of private and public funds. That’s a big takeaway.

The Brookings initiative encouraged cities to look more consciously at their export economies. So, we raised our hand and said, ‘All right, we’ll do that.’ And then we immediately remembered that we’re already the leading manufacturing export metro in the country, and what more could we have to learn? (laughs)

But we learned rather quickly that Houston’s small- to medium-sized businesses actually participate less in the export economy than in most other cities. Our smaller businesses sell to our big companies and the big companies export. We have great export stats, but when you look under the covers you realize it’s because we have these behemoth companies, and the smaller businesses aren’t involved that much. They could be in more diverse markets and could be growing faster. Companies that export directly tend to grow faster than companies that don’t.

Realizing this has forced us to think about what we can do to encourage small- and medium-sized businesses to [get into] exporting. They need someone to say ‘Here’s what you need to do business in country X, legally and culturally and financially.’ And now we’re building a broader-based export initiative in Houston out of that discussion.

The other piece we’ve taken out of the report is that innovation happens in Houston, historically, for two primary reasons. Our energy industry, by its nature, is very technology-dependent, so a huge amount of innovation goes on in that industry, and thank goodness, because that’s what’s driven the shale play. And we also have tremendous innovation at the Texas Medical Center. I can get off the plane in any country on the planet and they know we’re about energy and they know we’re about life science and medical research. M.D. Anderson is one of the strongest brands in the world, and it’s as strong as any other brand associated with Houston and Texas.

Part of the Brookings discussion has been how to create an innovation hub. They point out that you have to have density of activity, because much innovation occurs from casual interaction. They’re helping us discover how to create a dense infrastructure around innovation, and in Houston that’s going to be in and around the medical center, Rice and the University of Houston, and our midtown urban scene where young people want to live. We’re looking at how we can create an innovation zone around our medical center.

That whole conversation has been very much affected by our conversation with Brookings. It’s one thing to say you have innovation occurring, but how do you consciously promote innovation in a metro area? We want the commercialization of the research being done in Houston to occur here, not in other cities.

On Houston’s place in the global economy:

My city has an extraordinary diversity of talent. We’re very much an international city. One out of four residents in the greater Houston area was born outside of the U.S. While a lot of that is Hispanic, it’s also Asian and African and European. We’re the number-one merchandise exporting metro in the country. Many people don’t realize that, and it’s an extraordinary statistic when you think about it. We’re incredibly integrated into the global economy. We draw upon talent from around the world, and our city’s businesses reach markets around the world. That’s how innovation occurs. It doesn’t happen in a cocoon. It happens in an interconnected, interpersonal setting.

On why millennials are flocking to Houston:

What do young workers today want? They’re going to choose a city based, first, on its feel: Is this the kind of place I want to live? And the question right behind that is: Where will I have the greatest opportunity to build a career or business? Or to be successful, in whatever way they may define success.

Young people of this generation want and expect diversity, and all of the things it brings to a community. We’re the most diverse metro in the country. Mayor Turner likes to say – and it’s true – that we’re more diverse than New York City, Los Angeles and Chicago. We’re a multiracial, global city. And they’re looking for that combination: quality of life, diversity and great opportunity. And in Houston, we offer real economic opportunity and a quality of life that [doesn’t require you to] use up your whole paycheck on your living and housing costs. You don’t have to miss that restaurant you heard about or that play you read about.

And that all has to be in a setting of innovation. That’s what’s driving today’s economy. Millennials want to see opportunity, quality of life and diversity in the context of innovation, because they know that’s what is going to sustain the city’s economy in the long run.

On Houston’s transportation challenges:

I’d point to the success of the last two legislative sessions in devoting funds to transportation. That’s fueling an opportunity for major improvements in the next few years. I think the public might have reached its limit on toll road acceptance. Now we have some money to put into transportation issues.

Within major metros, we can begin to address congestion in a way we couldn’t before. There’s been an effort in the Texas Transportation Commission to look specifically at congestion within our cities, and to spend money in a very targeted way to eliminate bottlenecks. Bottlenecks affect the movement of freight and people, and therefore have a direct impact on the economy. The other aspect, of course, is movement between cities, and we have this larger movement from the border up and throughout the state that we need to facilitate if we’re going to have a strong economic interconnection with Mexico.

On the importance of the Port of Houston:

We often joke that the Port of Houston is a hidden asset – much of our population lives or works west or north of the city, and consequently a lot of our citizens don’t see it every day. But our port is a huge contributor to the city, state and national economies. It’s far and away the largest port in Texas and on the entire Gulf Coast. It’s been the largest port in the U.S. in terms of foreign tonnage for 20 consecutive years.

We still make things in Texas, and I say that because some economies around the U.S. have evolved almost entirely into service economies. But we produce many tangible goods here in Texas. And those goods need access to foreign markets. Fortunately, we have this incredible asset in the port. And that was true even before the Panama Canal expansion.

So now we have a major opportunity in Texas to become independent of West Coast ports. For the first time ever, we now have scheduled container service with Asian ports. The Port of Houston, to its credit, has taken the steps to make our two container terminals as deep as the main channel, and that makes us very competitive.

For the first time, the Port of Houston will be significant to the whole middle of the U.S. We’ve long moved Midwest grain in and out of the port, but by and large manufactured goods from the Midwest traditionally have come in from West Coast ports, moving west to east. Now you’re beginning to see that change. That’s the future: Texas is going to be the port of entry for the entire U.S. Midwest. FN

Read the Brookings report: Redefining Global Cities. (PDF)