STILLWATER, Okla. - A study by researchers at the Oklahoma State University Center for Applied Economic Research shows that the economic performance of Oklahoma and Texas are linked via undeniable trade flows, and growth in one state results in growth in the other state.

The study was conducted by Kyle Dean and Russell Evans, associate director and director of the OSU economic research center. Dean and Evans constructed a multi-regional input-output model to estimate the level of economic interdependency that exists between Oklahoma and Texas along the I-35 Corridor from Oklahoma City to Dallas/Fort Worth.

The model allowed the OSU economists to estimate the level of inter-regional dependency by observing the impact that 1 percent Texas region growth has on the Oklahoma region, and vice versa.
“With the growth of the I-35 corridor, there has been much interest in identifying the linkages that exist within the region between the northern Texas and Southern Oklahoma areas,” Dean said. “As would be expected from a regional economic area that crosses state boundaries, a healthy rivalry exists between the states of Oklahoma and Texas and certainly between Dallas/Fort Worth and Oklahoma City.”

Dean said although the competition is healthy, there are many things that the two regions share, such as language culture and an energy industrial base, and there are areas for cooperation between the two regions.

Although the gross regional product of the Texas region is roughly 5.6 times more than the gross regional product of the Oklahoma region, the study shows that the interdependency between Oklahoma and Texas flows in both directions.

The study shows that a hypothetical 1 percent increase in Texas region input, or gross domestic product, will likely result in an .08 percent increase in Oklahoma output. This resulting .08 percent increase is the equivalent of $56 million of additional output and 281.73 full-time equivalent jobs with an added payroll of $37 million to the Oklahoma region economy.

In addition, the study shows that a hypothetical 1 percent increase in Oklahoma region input, or gross domestic product, will likely result in a .04 percent increase in Texas output. This resulting .04 percent increase is the equivalent of $173.7 million of additional output and 877.17 full-time equivalent jobs with an added payroll of $120 million to the Texas region economy.

“With the increase in global economic activity, Oklahoma and Texas should look for areas of cooperation that will increase the productivity of the larger ‘mega-region’ that they create,” Dean said. “As the U.S. population continues to migrate south and west, infrastructure projects that increase the competitiveness of the entire mega-region will increase the ability of the region to assimilate the growth and increase its competitiveness.”

The study also analyzed the interdependency between an expanded region from the Oklahoma-Kansas border to Austin, Texas. To read the study in its entirety, visit http://spears.okstate.edu/caer/research.

The Center for Applied Economic Research (CAER) is housed in the Spears School of Business and has a long-standing tradition of applying economic analysis to existing and proposed public policy mesaures, questions of business and government efficiency and effectiveness, and the issue of regional economic development and forecasting. The CAER pursues an applied research program developed to contribute to the economic advancement of the State of Oklahoma and provide opportunities for faculty and students to engage in the theoretical analysis of public policy and the empirical estimation and forecasting of economic outcomes.