Mapping the Enabling Conditions for Texas’ Competitiveness Strategy for the Next 25 Years

Session Overview

Pulling from insights gathered throughout the Texas Competitiveness Conversation, leaders from across the region examined the enabling conditions essential for the state’s competitiveness strategy over the next 25 years, including the intersection of policy, infrastructure, education, innovation, and workforce development.

Key Session Insights

Texas is rapidly solidifying its reputation as a premier destination for business and innovation, attracting companies and talent from across the country. Mr. Brad Morrison, Member of the Board of Directors for the Texas Space Commission, captured this momentum succinctly, stating, "The center of our country is moving to Texas." The state's business-friendly policies, welcoming economic climate, and strong collaborative spirit have created an environment where organizations can thrive.

A central pillar of Texas’ innovation ecosystem is its culture of collaboration — an economic environment built on collegial relationships and partnerships. This distinction is one reason Texas has begun to overtake California in terms of its attractiveness to technology companies, but Dr. David Brown, Executive Director of the University of Texas at San Antonio’s (UTSA) National Security Collaboration Center (NSCC), warned Texas should “not recreate the Silicon Valley model; it is not the model you want.”

This sense of community that permeates Texas’ economic environment has driven the rise of “patriotic capital,” an influx of investment driven by confidence in the state’s potential. Mr. Morrison described this phenomenon as a driving force behind major projects like the Texas Stock Exchange, which has the potential to attract substantial federal, state, and private capital. But investment alone is not enough; Texas must ensure its growth is focused and strategic. Too often, discussions about innovation lack direction, and as Dr. Brown noted, “We talk about innovation all the time, but it is often without focus.” To avoid this pitfall, Texas must direct its innovative energy toward industries that will define its future. Mr. Morrison identified four key sectors leading this transformation: the space economy, semiconductors, small modular reactors (SMRs), and smart grids. Each of these industries represents not only an economic opportunity but a critical element of national security.

A strong commitment to national security is reinforcing Texas’ economic leadership, particularly in cybersecurity, aerospace, and defense. Dr. Brown highlighted the extensive network of investors supporting defense-related projects, while also pointing to the potential establishment of a Texas Cyber Command, a move that would significantly enhance the state’s cybersecurity capabilities. San Antonio is poised to play a pivotal role in these efforts, leveraging its military and intelligence resources to strengthen America’s national security infrastructure. With the increasing militarization of space, ensuring a permanent U.S. presence in orbit will be critical, and Texas is uniquely positioned to contribute to this objective.

Texas’ economic growth and national security efforts, however, cannot succeed without a strong workforce and modern infrastructure. Mr. AJ Rodriguez, Executive Vice President of Texas 2036, underscored the importance of workforce retention, noting that Texas has an 82 percent retention rate, an essential advantage as industries evolve. But as the state’s population approaches 90 million, workforce development must keep pace with the demands of a rapidly changing economy. Infrastructure investment will be equally crucial, particularly in resource management and energy innovation. Among the most pressing infrastructure challenges are water security and energy resilience. Rodriguez pointed out that Texas loses the equivalent of Lake Buchanan’s worth of water (185 billion gallons) annually due to aging, deteriorating water infrastructure. He noted that a Texas 2036 study released last year identified a $2 billion economic impact cost to the state due to underinvestment in utility system infrastructure. Without a dedicated funding plan for renewing Texas’ outdated water infrastructure, these losses threaten businesses and communities alike. At the same time, Texas’ energy grid must be modernized to meet growing demands, with smart grids playing a critical role in improving efficiency and resilience. With a substantial budget surplus, Texas has the resources to make these strategic investments, but it is crucial these investments in workforce development and critical infrastructure are made to sustain Texas’ economic engine.

As Texas continues its ascent, its leaders must remain proactive in shaping the state’s future, and as Mr. Drew Scheberle, Executive Director of the National Security Innovation Council, pointed out, the state must not become complacent from its success. While Texas has already established itself as a leader in business, technology, and national security, its long-term success depends on strategic investments, modernizing critical infrastructure, and maintaining its culture of cooperation.