Although low cost helps Houston compete, the glue that binds these companies to the area is much like the glue that creates any other cluster of industrial activity in the United States. First, Houston is the focal point for new technologies and other developments in the design and construction of petrochemical facilities. Design and engineering companies need to be in Houston to ensure they are plugged into this important knowledge loop. Third, the area's large number of engineers provides a pool of thousands of potential applicants for skilled-job openings. Figure 2 shows the distribution of work won by international contractors by geographic market, based on the share of new contracts through 1993 and the share of revenues thereafter.
Several trends are apparent.
One is the long-standing decline of work in the Middle East, a stronghold for the petrochemical market and an area where American companies have long been the dominant builders. The other significant trend has been the rise of the Asian construction market. Fueled by annual real GDP growth rates in these countries of 8 percent to 10 percent since 1990, Asia has been the world's largest and fastest growing market in the '90s. These numbers, however, don't reflect the effects of last year's Asian financial crisis. Figure 3 shows the distribution of winning contractors by exporting region, with the shares of each based on its annual share of new contracts or revenue.