Economic Complexity of Tulsa

A year or so ago, just I started tilting at this particular windmill, I happened across an interesting study from Brookings on “global cities”… and to me the interesting aspect was the middle-US cities on the list, including San Antonio and Kansas City as “American Middleweights” plus Dallas, Austin,  and Denver as “Knowledge Capitals”.  Flipping through again today, I can’t help but notice Trade, Innovation, and Talent under Enablers, which resonates nicely with the innovation topic near the start of this series and the learning networks of late.  Of course trade is one of the keys to the growth goals, and we’ll talk more about exports here shortly.

If you’re interested, this study can be found here:
https://www.jpmorganchase.com/corporate/Corporate-Responsibility/document/gci-redfining-globalcities.pdf

To me, this suggests two obvious paths for our “learning networks”:

-          Connect our educational institutions and appropriate industries purposefully to the nearby knowledge centers of Austin, Dallas, and Denver.

-          Connect our business and trade infrastructure, including local and state gov’t manufacturing agencies, to Kansas City and San Antonio.

The cities in the Brooking studies already have purposeful plans to leverage the Global Cities initiatives somewhere in the Chambers of Commerce and other business groups, so outreach and liaison focusing on joint success should be the goal.  Of course, this means we need to be very particular about what each outreach area should be, as it needs to be:

-          An innovation or market adjacency for us, or both, so it’s attainable for us

-          An adjacency for the target city, so it’s attainable for the other city

-          Ideally, arranged so the highest value parts of the partnership product end up in Tulsa

Which brings us to picking product and tech niches.  We know from past discussions that two fruitful areas for innovations are:

-          One-step-up tech adjacencies – building on what we know, standing on the shoulders of giants, and so forth

-          Remix opportunities, which are adjacencies formed by putting together two separate (not necessarily closely related) technologies or products

If we reach out to pull in tech from Knowledge Capitals then there should be fertile ground for some new inventions and innovations, plus if we can find outflow channels for new products through the Middleweights then there should be novel opportunities there too.

So, we have a basic vision, hopefully some creative tension to drive action and invention, and the beginnings of a strategy to grow our people-network connections, foster innovations, and expand sales.  I would submit that this alone could provide a path to success, but I believe we can do better, if we can purposefully bias our actions toward high-value targets. 

This brings us to the point of this entire series, and what I believe represents our opportunity to tilt the balance toward success.  <drumroll, please>

In his pioneering work on global trade, and associated work since, Hidalgo built a database of the relative product complexity and economic competitiveness of a wide range of products.  He also built graphs showing correlation between products in markets, which represent both technical and market adjacencies, and the networks of people/companies/institutions which support them.  If we are to be successful, we need to climb our way up the economic complexity value ladder, purposefully seeking to bootstrap ourselves from our current success points to better points.  Much as we may want to leapfrog way up the ladder, this mostly won’t be a path to success as there is simply too much build; we must climb up one rung at a time, but always moving upward.

The first step, then, for Oklahoma or Tulsa, is to determine where we sit today.  Recall that this is the necessary anchor for the creative tension part of vision:  establish the current point, set the vision point, and the delta drives innovation.  Here is where I need help, and where the Chamber or other sources of information could probably help.  

A quick Google yields five core industries for Oklahoma:

-          Oil and Gas industries, especially production

-          Data centers for information and finance

-          Transportation and Distribution

-          Agriculture and Biosciences

-          Aerospace and Defense, especially aviation maintenance, but also munitions

The Hidalgo index helpfully yields ratings for products in each space, and many more, with a high value of about 3.0 (manufacturing of machine tools) and a low of about -3.0 (oddly, for uranium and thorium mining).  Some values:

-          Crude Oil                    -1.08

-          Lubricating Oil            1.34

-          Petroleum Gases         -1.06

-          Misc Wheat                 -0.68

-          Flour                            -1.12

-          Aircraft Part                .50

-          Fertilizer                      -.70 to -.80

-          Computer parts           1.3 to 1.9

-          Munitions                    .3

-          Sausage                       About 0

-          Chromatographs          1.79 (this is a product my company makes)

-          Instruments for measuring flow 1.53 (this is the rest of what we make)

-          Trailers            .65

-          Data processing devices   1.0 to 1.4

Of course, the Tulsa industrial and technology base are far more varied and nuanced than this simplistic list, and to make this notion work I expect we will need to dig deep and be as precise as we can.  Unfortunately the list includes only products, not services like distribution and data processing (but think back a few sessions and recall that products contain and replicate information and knowledge, which is scalable and durable, versus services which are fleeting and scale-limited).   Still, I think I see in the data above why we struggle as a state to be economically competitive, and we could make the case that to a degree we suffer from a Resource Curse of our own.  Even within major niches like Energy, we should focus our growth plans on the most valuable aspects of it. 

Enough for today – there is still more to talk about in terms of correlations and adjacencies that Hidalgo uncovered in his research, and which I believe will be pertinent for our discussions as well.