By the year 2000, the Republican Party held all major statewide elective offices. Texan George H.W. Bush served as vice president of the United States for eight years and as president from 1989 to 1993. Bush's son, George W. Bush, became president in January 2001. He faced a national crisis when terrorists crashed hijacked airplanes into the World Trade Center towers in New York City and the Pentagon in Washington, D.C., on September 11, 2001.

Trade The Texas-Mexico border trade has always been important. A recent development in trade with Mexico was the establishment of maquiladoras near the border. These factories use Mexican labor and U.S. materials to produce goods. Although the maquiladoras provide jobs, the wages they pay are low and they have increased pollution along the Rio Grande.

Texas was highly affected by the passage of the North American Free Trade Agreement (NAFTA), which removed many trade barriers among Canada, the United States, and Mexico. Many goods from all three countries are now transported directly through Texas.

Texans have seen oil prices go up and oil prices go down. During boom periods, the prosperous oil industry in the state had a rippling effect that improved other areas of the economy. Similarly, during bust periods, like the one in 1986-1987, the state lost billions of dollars in income.

Education Realizing that the Texas economy could no longer depend upon agriculture and oil, the state began increasing its service and information industries. Thus, Texas needed more highly skilled, better educated people to work in these emerging industries. The legislature increased the amount of money the state gave to school districts, increased teacher salaries, and provided for free summer classes.