Texas continued to grow after the nation sank into recession in December 2007. Staying up so long in down times adds to the state's reputation for superior economic performance. For the past 40 years, employment has consistently grown faster in Texas than the U.S.--by 1 percentage point a year on average. ; In looking at the drivers of economic growth, recent research has put increasing emphasis on human capital and institutions, such as taxes and public spending. These factors partly explain why some U.S. states and regions have managed to maintain business climates conducive to faster growth. ; Various studies have tied Texas' edge over the rest of the nation to such advantages as low tax burdens and flexible labor markets. The challenge will be to preserve these features while positioning the state to compete in a more knowledge-intensive economy. ; Texas faces issues in public finance, education, changing demographics and infrastructure. How the state addresses them will help determine whether it can maintain its edge.>
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Article provided by Federal Reserve Bank of Dallas in its journal The Southwest Economy.