IC² Institute Blog

When only 15% of the 2800 new jobs created by a huge $1.5 billion West Texas wind farm development will be based in the U.S., something is wrong, especially because U.S. taxpayers may provide $450 million of the project’s costs via the federal stimulus program.  That’s a taxpayer investment of over $1 million per U.S. job, and while there are plenty of other excellent economic and public health reasons to make investments in alternative energy projects, stimulus money is designed to stimulate job creation.  A Chinese turbine manufacturer will license technology from General Electric and from German and Dutch wind firms, but the 240 turbines to be installed on the West Texas wind farm will be built in China (no word yet on where the blades and towers will be made).  The reason?  Majority financing for the enormous project is being provided by the Export-Import Bank of China.  Frozen U.S. credit markets, together with low natural gas prices, have slowed development of new wind projects in Texas, Kansas, and Arkansas this year, but the global downturn has not prevented the Chinese government from expanding its support for Chinese wind and solar energy manufacturers.

If the U.S. is to develop “green jobs” and reduce its current reliance on coal-fired electric power generation, it must work harder to develop the entire alternative energy pipeline, including R&D for technology development, worker training programs in 2-year degree programs, tax policies that incentivize onshore manufacturing, and national renewable portfolio standards for utilities. 

In West Texas, lower project development costs using Chinese-built turbines may mean a quicker path to profit for the wind developers and a lower cost per kilowatt of the electricity the project generates, making this alternative energy project that much more competitive with fossil-fuel-generated power in Texas. But public investment in green jobs now, coupled with Texas’ lead in generation capacity and the presence of turbine manufacturers like TECO-Westinghouse in Round Rock, could bring thousands of new manufacturing jobs to Texas instead of northeastern China.

The lead above-the-fold story in today’s Wall Street Journal heralds the possible end to our recession with the release of Q3 ‘09 GDP figures.  The 3.5% annual rate of expansion in the third quarter halts four straight quarters of decline during a recession that officially began in December 2007.  But what factors drove the Q3 expansion? From the article,

Without stimulus programs such as “cash for clunkers” and a first-time homebuyer’s credit, “real GDP would have risen little, if at all, this past quarter,” Christina Romer, president of the White House Council of Economic Advisers, said in a statement.

But the accompanying graphic included in the story identifies EXPORTS as being the single leading contributor to the expansion, worth 1.5 percentage points of the 3.5 percent jump. And Texas is the leading export state in the U.S., having surpassed California in 2002.  Chemicals, computers and electronics, and machinery dominate Texas’ export product mix, and all are high value-added product categories.   The real story behind the jump in GNP, then, might not be the dependency of consumers on government programs like “Cash for Clunkers” and the first-time home buyers’ tax credit, but the resiliency of firms to remain innovative, nimble, and competitive in a still-globalized economy.  Texas was among the last states to feel the effects of the current recession, and many economists believe it will lag in recovery.  But exports might mean Texas will lead, not lag, coming out of the recession. What are your thoughts?

What effect might national healthcare reform have on Texas-Mexico border communities?  What reform initiatives to improve healthcare outcomes along the border should be included in the healthcare reform debate?  A new article in Texas Business Review by Nuria Homedes and Antonio Ugalde looks at healthcare along the border from a bi-national perspective.  Perhaps surprisingly, a large number of people from both countries cross the border to obtain health services in the U.S. and Mexico, but for different reasons: wealthy Mexicans come to the U.S. for high-end or elective services, whereas U.S. residents, often the uninsured, go to Mexico to save money on routine medical procedures or simply to *find* services that are in short supply in colonias and other areas along the U.S. side of the border.  Among other recommendations, the authors call for increased coordination between Mexican and U.S. health authorities to more effectively deliver healthcare services to border populations.

One hundred economists spent 3 days discussing, debating, and diciphering local and national economic trends during the 63rd annual conference of the Association for University Business and Economic Research.  Keynote speaker David Altig, director of research at the Atlanta Fed, cautioned the group during his address that the economy was far from recovered and took issue with those who say the Fed should begin raising rates.  For attendees, the conference was a chance to hear from experts in academia and the business world, including two senior economists from BBVA Compass Bank who gave outlook talks on the U.S. and global economic situation.  A tour of Freescale Semiconductor’s cleanroom facility in Oak Hill gave conferees insight into Austin’s high-tech economy.  Visit Auber.org for video and interviews from the conference. Panel presentations will be posted in coming days.

What factors influence a high school senior’s decision to go to college? New survey research, combined with Texas Workforce Commission data on employment, seeks to identify factors that heavily influence higher ed and workforce outcomes among Central Texas high school graduates. In the August issue of Texas Business Review, Deanna Schexnayder and her colleagues at the Ray Marshall Center for the Study of Human Resources summarize their preliminary findings from the Central Texas Futures Project, an ambitious new research study aimed at more effective workforce development.

For traditionally underserved groups like Hispanics and first-generation college students, key factors influencing the decision to attend college include taking college prep curricula in high school like the DAP or RHSP, and completing the FAFSA.  The authors go on to find that “after controlling for other effects, Hispanic males were twice as likely to enroll in four-year colleges than Hispanic females, while gender had no effect for all surveyed graduates.” Policymakers can use findings contained in the report to customize targeted strategies to boost college enrollment rates and improve workforce outcomes among Hispanics, the state’s fastest-growing population segment.

The ICTPI 2009 conference in Porto, Portugal, just concluded. I presented a paper during the “New Frontiers in Science and Technology” session. My presentation was entitled ”Mechanism of Corporate Environmental Management: Empirical Study of Japanese and U.S. Firms.” I talked about the relationship between external pressure about environmental activity and corporate  environmental management strategy.  I was the only person from East Asia at the meeting! Most attendees were from Europe, the U.S. and South America.

Will Wynn, former mayor of Austin, gave a talk about city management and Austin’s appealing culture.  I didn’t know that with a population of  800,000, Austin is currently the 14th largest city in the U.S.  Moreover, the population growth rate is high, and because of this,  Austin has huge energy supply capacity needs. For sustainable development, the mayor pointed out that it is going to be very important for Austin to build and develop clean energy supply systems.

Porto, a World Heritage site, is a really beautiful city.  But there are very few Asian people here—it is the first time I’ve ever felt like a minority!

New Japanese Phrase for the day:
Tanoshi-desu (I enjoy it)

As the debate goes on in Texas over whether to continue to finance road construction with tolls, there is new evidence that increasing tolls charged to cross the bridges between El Paso and Ciudad Juarez does not affect traffic volumes.  With such inelastic demand for border crossings by foot, car, or truck, local policymakers may have more leeway in raising revenues to pay for infrastructure maintenance and expansion of border-crossing facilities, which would ease transit times and lower shipping and other costs of trade. 

Speaking of El Paso, I came across an interesting article on crime rates in cities with large immigrant populations.  After Honolulu and New York, El Paso has the third lowest murder rate of any U.S. city last year with a population over 500,000.  Is it because immigrant entrepreneurship leads to safer communities? We know that newly arrived immigrants have higher self-employment rates than second- or third-generation minorities and the domestic population as a whole, which may provide more economic stability during recessions.

Hello, everybody! My name is Hidemichi Fujii. I am an IC² Visiting Scholar from Hiroshima,  Japan, and I am spending the year in Austin working on a project on environmental management and economic performance, especially of industrial firms in Japan, the U.S., Europe, and China.

I will attend the  12th International Conference on Technology Policy and Innovation (ICTPI) in Porto, Portugal, to give a paper on my work. This is my first trip to Europe, so I am really excited. I recently published a paper I co-authored entitled “­­­­­­­Financial allocation strategies for the regional pollution abatement cost of reducing sulfur dioxide emissions in the thermal power sector in China” in Energy Policy. I plan to post updates on my conference presentation in Portugal—see you soon!

I will introduce one Japanese word at the end of my blog every time.

Ogenki desu ka? It means “how are you?”

Already issues! Two of my students have been helping me with some of the logistics. We wanted to meet with NGO officials to talk to them about poverty reduction, but no one will meet with us. We even tried some of our guanxi but were told that we needed to have an official stamped letter from the Texas or US government to the Chinese government to ask any questions. Welcome to doing research in China! Sometimes it is very easy, and sometimes, no dice. I know the household level surveys will be easier because we are going through someone experienced in doing these same surveys, but I was surprised that NGOs were not allowed to talk to us.

Welcome to the new IC2 Blog, intended to give program managers, researchers, visiting scholars, and staff at the Institute a chance to share their current ideas and research.

I wanted to use my first posting to point toward a couple of the most recent reports and studies from the Bureau of Business Research. My colleagues in the Bureau, Elsie Echeverri-Carroll and Sofia Ayala, recently published an article in Policy Review on competitiveness and regulation, which will interest those concerned about the potential impact on businesses of climate change policy.  And my colleague Jim Jarrett and I, together with Noel Busch of the UT-based Institute for Domestic Violence and Sexual Assault, coauthored a study for the Texas Legislature examining the socio-economic effects of the state’s sexually oriented businesses, a $1 billion business segment subject to the controversial Adult Entertainment Fee.