Texas Economy and Industries
Texas possesses the second largest economy of any state in the United States, with a gross domestic product exceeding $2.0 trillion annually. If Texas were a sovereign nation, its economy would rank approximately eighth in the world, comparable in scale to that of Italy or Brazil and larger than the economies of Australia, South Korea, and Spain. This extraordinary economic output is generated by a workforce of more than 14 million people across an economy that has diversified far beyond its historical dependence on oil and gas, encompassing world-leading positions in technology, healthcare, aerospace, defense, agriculture, international trade, and construction.
The transformation of the Texas economy over the past five decades represents one of the most significant economic evolutions in American history. While the state was devastated by the oil price collapse of the 1980s -- an event that triggered a banking crisis, real estate crash, and population outmigration -- that crisis catalyzed a deliberate diversification effort that has made the modern Texas economy remarkably resilient. Today, while energy remains important, it accounts for approximately 10 percent of the state's GDP, compared to more than 25 percent in the early 1980s. The state's no-income-tax policy, business-friendly regulatory environment, large and growing labor force, central geographic location, and extensive infrastructure have combined to make Texas one of the most attractive destinations for corporate relocation and expansion in the nation.
Energy
Texas is the largest energy-producing state in the nation and has been the center of the American petroleum industry since the Spindletop gusher near Beaumont in 1901 transformed the global energy landscape. Today, Texas produces approximately 5.5 million barrels of crude oil per day -- more than 40 percent of total U.S. production -- along with approximately 30 billion cubic feet of natural gas per day, representing roughly 25 percent of national output. The Permian Basin in West Texas, centered on Midland and Ector counties, is the most productive oil field in the Western Hemisphere and has experienced a dramatic renaissance since the advent of horizontal drilling and hydraulic fracturing technologies in the early 2010s.
Houston, in Harris County, serves as the operational and administrative capital of the global energy industry. The city is home to the headquarters of major integrated oil companies, independent exploration and production companies, oilfield services firms, pipeline companies, and energy trading operations. The Houston Ship Channel and surrounding petrochemical complex in Harris, Galveston, Brazoria, and Jefferson counties constitutes the largest petrochemical complex in the world, refining crude oil into gasoline, diesel, jet fuel, and the chemical feedstocks that form the basis of the plastics, pharmaceutical, and advanced materials industries. For electrical professionals working in Texas energy infrastructure, see Texas Electrical Authority.
Texas has also become the nation's undisputed leader in renewable energy, particularly wind power. The state leads all others in installed wind energy generation capacity, with more than 40 gigawatts of capacity producing approximately 25 percent of all wind-generated electricity in the United States. The majority of this capacity is concentrated in the Panhandle and West Texas regions, where steady high-plains winds and available land have attracted billions of dollars in investment. Solar energy development has also accelerated, particularly in West Texas, where the combination of intense solar radiation and available land makes utility-scale solar generation increasingly competitive. For professionals in the EV charging infrastructure sector, see Texas EV Charger Authority.
Technology
The technology sector has emerged as one of the most dynamic and rapidly growing components of the Texas economy, particularly in the Austin and Dallas-Fort Worth metropolitan areas. Austin has earned the designation "Silicon Hills" through its concentration of technology companies ranging from global giants to innovative startups. Tesla relocated its corporate headquarters to Austin in 2021 and constructed its Gigafactory Texas, one of the largest manufacturing facilities in the world, in southeastern Travis County. Oracle moved its corporate headquarters from Silicon Valley to Austin in 2020. Samsung operates a major semiconductor fabrication facility in Austin and is constructing a $17 billion expansion in nearby Taylor (Williamson County). Apple's Austin campus employs more than 6,000 workers, and Google, Meta, Amazon, and dozens of other major technology companies maintain significant operations in the region.
The Dallas-Fort Worth metroplex has developed its own technology identity, particularly in telecommunications, enterprise software, and semiconductor manufacturing. Texas Instruments, headquartered in Dallas, is one of the world's largest semiconductor companies and is investing $30 billion in new fabrication facilities in the DFW area. AT&T maintains its global headquarters in Dallas. The suburban corridor of Collin County, particularly the cities of Plano, Richardson, and Frisco, has attracted major technology campuses from companies including Toyota North America, JPMorgan Chase, Liberty Mutual, and numerous enterprise software firms.
The combined technology sectors in Austin and DFW employ hundreds of thousands of workers directly and support a broader ecosystem of venture capital, accelerators, university research programs, and professional services. The University of Texas at Austin and Texas A&M University provide a steady pipeline of engineering and computer science talent that sustains the industry's growth.
Agriculture
Agriculture remains a foundational component of the Texas economy, with the state ranking first in the nation in total number of farms and ranches, total acreage in farms and ranches, and the production of cattle, cotton, wool, and mohair. Texas's approximately 248,000 farms and ranches cover 127 million acres -- roughly 74 percent of the state's total land area -- and generate annual cash receipts exceeding $25 billion, making Texas the third largest agricultural state by revenue behind California and Iowa.
Cattle ranching is the single largest agricultural enterprise in Texas. The state is home to approximately 13 million head of cattle, more than any other state, including both beef cattle operations spread across virtually every region of the state and a concentrated feedlot industry in the Panhandle region. The Panhandle's feedlot operations, centered around Amarillo and Lubbock, finish millions of cattle annually for the beef processing plants operated by major meatpackers in the region. For comprehensive information on the state's agricultural sector, see Texas Agriculture Authority.
Cotton is the state's leading crop by value, with Texas producing approximately 25 to 40 percent of the nation's cotton crop depending on weather conditions. The majority of Texas cotton is grown in the South Plains around Lubbock, the Rolling Plains, and the Rio Grande Valley. Other significant crops include grain sorghum (Texas leads the nation), corn, wheat, hay, pecans (Texas is the nation's largest pecan-producing state), citrus fruits in the Rio Grande Valley, and vegetables including onions, watermelons, and spinach. The dairy industry, concentrated in the Panhandle and Central Texas, has grown substantially and now generates more than $2 billion in annual revenue.
Aerospace and Defense
Texas is one of the most important states in the nation for aerospace and defense activity, with major military installations, NASA operations, defense manufacturing, and a growing commercial space sector. The defense sector alone generates more than $150 billion in annual economic impact and supports hundreds of thousands of jobs across the state.
Military installations in Texas include Fort Cavazos (formerly Fort Hood) in Central Texas, one of the largest active-duty military installations in the world; Joint Base San Antonio in Bexar County, the largest joint base in the Department of Defense encompassing Fort Sam Houston, Lackland Air Force Base, and Randolph Air Force Base; Fort Bliss in El Paso County, one of the largest Army installations by geographic area; and Naval Air Station Corpus Christi in Nueces County. Additional installations include Sheppard Air Force Base in Wichita Falls, Dyess Air Force Base in Abilene, Goodfellow Air Force Base in San Angelo, and Laughlin Air Force Base in Del Rio.
Defense manufacturing is anchored by Lockheed Martin's Aeronautics division in Fort Worth (Tarrant County), which produces the F-35 Lightning II, the most advanced fighter aircraft in the world and the largest defense acquisition program in history. The Fort Worth facility employs more than 17,000 workers and generates billions of dollars in annual output. Bell Textron, also based in Fort Worth, manufactures military rotorcraft including the V-22 Osprey tiltrotor. L3Harris Technologies, Raytheon, and numerous other defense contractors maintain significant operations across the state.
NASA's Lyndon B. Johnson Space Center in Houston is the epicenter of American human spaceflight, serving as Mission Control for the International Space Station, the training facility for the astronaut corps, and the development center for the Orion spacecraft and future lunar exploration programs. The commercial space sector has also established a presence in Texas, most notably with SpaceX's Starbase facility near Boca Chica Beach in Cameron County, where the company develops and tests its Starship launch vehicle.
International Trade
Texas is the leading export state in the nation, with exports consistently exceeding $375 billion annually -- more than California, the second-ranking state. This dominance in international trade is driven by the state's 1,254-mile border with Mexico, extensive port infrastructure, strategic geographic position, and the concentration of energy, technology, and manufacturing industries that produce globally competitive goods.
Mexico is by far the largest trading partner for Texas, accounting for more than one-third of the state's total exports. The USMCA (United States-Mexico-Canada Agreement) trade corridor through Texas represents the most active international trade zone in the Western Hemisphere. The city of Laredo in Webb County processes more international trade by value than any other inland port in North America, with more than 16,000 trucks crossing the World Trade Bridge daily. El Paso-Ciudad Juarez is another critical border crossing, with integrated manufacturing supply chains spanning both sides of the border.
The Port of Houston is the largest port in the United States by foreign waterborne tonnage and the second largest by total tonnage, handling more than 250 million tons of cargo annually. The port complex includes the Houston Ship Channel, Barbours Cut Container Terminal, and the Bayport Container Terminal. Other significant Texas ports include the Port of Beaumont, the Port of Corpus Christi (one of the nation's largest crude oil export terminals), the Port of Galveston, and the Port of Brownsville. The state's commercial airports, particularly DFW International Airport and George Bush Intercontinental Airport in Houston, handle billions of dollars in air cargo annually.
Healthcare
The healthcare industry is one of the largest employers in Texas, with the state's healthcare sector generating hundreds of billions of dollars in annual economic activity and employing more than 1.5 million workers. The Texas Medical Center in Houston is the largest medical complex in the world, encompassing more than 60 member institutions including hospitals, research institutes, academic programs, and public health organizations. The complex employs more than 106,000 people and treats more than 10 million patients annually.
Individual institutions within the Texas Medical Center include MD Anderson Cancer Center, consistently ranked the top cancer hospital in the United States; Houston Methodist Hospital; Texas Children's Hospital, the largest children's hospital in the nation; and Baylor College of Medicine. Beyond Houston, the state's healthcare sector includes major systems such as Baylor Scott & White Health (headquartered in Dallas), University Health in San Antonio, and the UT Southwestern Medical Center in Dallas, one of the nation's premier academic medical centers.
Construction and Trades
The construction industry is one of the largest sectors of the Texas economy, driven by the state's sustained population growth, corporate relocations, infrastructure development, and energy sector capital investment. Texas consistently leads the nation in construction spending, with annual construction activity exceeding $100 billion. The state adds more housing units annually than any other state, and major commercial, industrial, and infrastructure projects are underway in every major metropolitan area.
The construction trades -- including general contracting, electrical work, plumbing, HVAC, roofing, concrete, and specialty subcontracting -- employ hundreds of thousands of workers across the state. The Authority Network America maintains comprehensive resources for trade professionals operating in Texas, including Texas Contractor Authority, Texas Commercial Contractor Authority, Texas Commercial Authority, Texas HVAC Authority, Texas Plumbing Authority, Texas Electrical Authority, Texas Roof Authority, Texas Pool Authority, Texas Restoration Authority, and Texas Lawn Care Authority. Metro-specific resources include Houston Contractor Authority, Dallas Contractor Authority, Austin Contractor Authority, and San Antonio Contractor Authority.
Texas has a distinctive regulatory environment for the construction trades. Unlike many states, Texas does not require a statewide general contractor license, though specific trades including electrical work, plumbing, and HVAC require state licenses administered by the Texas Department of Licensing and Regulation (TDLR). Many municipalities impose additional licensing requirements, creating a patchwork of local regulations that contractors must navigate. For legal guidance on Texas business and regulatory requirements, see Texas Legal Authority.