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Air Cargo Services, the State and Industrialization Strategies in the Philippines: The Redevelopment of Subic Bay

Author

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  • John Bowen
  • Thomas Leinbach
  • Daniel Mabazza

Abstract

In 1995, the American airfreight and package express firm FedEx established its principal Asian hub at the site of a former naval base in Subic Bay, the Philippines. The new hub transformed the stature of this peripheral region within an international economy in which air cargo services perform an increasingly critical integrative role. After the new hub was launched, Subic Bay's early success in attracting foreign direct investment, particularly from Taiwan, made it a paragon of the Philippine government's emphasis on export-oriented industrialization. However, the development impact of the hub was complicated as its positive effect was mediated by the tension between liberalization and rent-seeking practices. That tension was illustrated vividly by the Philippines' suspension of most air services to and from Taiwan for several months in 1999 and 2000. The suspension of services damaged the Philippine government's drive to attract foreign capital, but ironically, FedEx, as an American carrier, was not affected by the Taiwan-Philippines conflict; its Subic hub remained a well-integrated enclave of the global economy and continued to attract new investment, albeit from different sources. The impact of the conflict on Subic Bay illustrates both the vulnerability and the flexibility of peripheral industrial enclaves. En 1995, la societede fret aerien et de courrier express americaine FedEx a etabli son principal centre sur l'emplacement de l'ancienne base navale dans Subic Bay, aux Philippines. Le centre a transformele statut de cette region peripherique situee au sein d'une economie internationale dans laquelle le fret aerien joue un role integre de plus en plus essentiel. Suite au lancement du nouveau centre, Subic Bay a reussi aattirer de l'investissment direct etranger, notamment en provenance du Taiwan, ce qui a incitele gouvernement des Philippines a mettre l'accent sur une industrialisation vouee al'exportation. Cependant, le potentiel du centre a etecomplique parce que son effet positif a eteinfluencepar la tension entre les processus de liberalisation et la poursuite des rentes. Une telle tension est parfaitement illustree par la decision du gouvernement des Phillipines de suspendre la plupart des services aeriens a destination et en provenance du Taiwan pendant plusieurs mois en 1999 et en l'an 2000. La suspension des services a porteatteinte ala campagne du gouvernement des Philippines destinee a attirer de l'investissement etranger mais, ironiquement, FedEx, en tant que compagnie aerienne americaine, ne fut pas touchepar le conflit entre le Taiwan et les Philippines, et le centre a Subic est resteune enclave bien integree de l'economie mondiale et a continued'attirer de nouvel investissement, bien que des sources differentes. L'impact du conflit sur Subic Bay demontre a la fois la vulnerabilite et la flexibilite des enclaves industrielles peripheriques. Im Jahre 1995 errichtete die amerikanische Luftfracht-und Paketbeforderungsfirma FedEx ihre asiatische Hauptgeschaftsstelle auf den Philippinen auf dem Gelande der ehemaligen Marinestation in Subic Bay. Die neue Zentrale bedeutete eine grundlegende Veranderung der Stellung dieser peripheralen Region in einer internationalen Wirtschaft, in der Luftfrachtdienste zunehmend eine kritische, integrierende Rolle spielen. Die Eroffnung der neuen Zentrale liess Subic Bays anfanglichen Erfolg als Anziehungskraft fur Direktinvestierungen vom Ausland, besonders von Taiwan, zum Musterbeispiel Export-orientierter Industrialisierung werden, um die es der philippinischen Regierung sehr zu tun war. Die Auswirkung der Geschaftsstelle auf die Entwicklung uberhaupt war jedoch kompliziert, insofern als ihre positive Wirkung durch die Spannungen zwischen Liberalisierung und dem ublichen geschaftlichen Verfahren, Miete zu verlangen, herbeigefuhrt wurde. Diese Spannung wurde anschaulich illlustriert, als die Philippinen in den Jahren 1999 und 2000 die meisten Flugdienste von und nach Taiwan fur mehrere Monate stillegte. Die Stillegung war den Bemuhungen der Regierung, auslandischem Kapital attraktiv zu erscheinen, abtraglich, doch auf FedEx, einen amerikanischen Transportunternehmer, wirkte der Konflikt zwischen Taiwan und den Philippinen sich nicht nachteilig aus: seine Zentrale in Subic blieb eine gut integrierte Enklave der globalen Wirtschaft und weiterhin attraktiv fur neue Investierungen, obschon nun von anderen Quellen. Die Auswirkung des Konflikts von Subic Bay illustriert Verletzlichkeit und Flexibilitat am Rande gelegener industrieller Enklaven.

Suggested Citation

  • John Bowen & Thomas Leinbach & Daniel Mabazza, 2002. "Air Cargo Services, the State and Industrialization Strategies in the Philippines: The Redevelopment of Subic Bay," Regional Studies, Taylor & Francis Journals, vol. 36(5), pages 451-467.
  • Handle: RePEc:taf:regstd:v:36:y:2002:i:5:p:451-467
    DOI: 10.1080/00343400220137083
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    References listed on IDEAS

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    1. R L Ivy & T J Fik & E J Malecki, 1995. "Changes in Air Service Connectivity and Employment," Environment and Planning A, , vol. 27(2), pages 165-179, February.
    2. Romeo M. Bautista & Mario B. Lamberte, 1996. "The Philippines: Economic Developments and Prospects," Asian-Pacific Economic Literature, The Crawford School, The Australian National University, vol. 10(2), pages 16-31, November.
    3. John D. Kasarda, 1991. "Global Air Cargo-Industrial Complexes as Development Tools," Economic Development Quarterly, , vol. 5(3), pages 187-196, August.
    4. Rimmer, Peter J, 1997. "US Western Pacific geostrategy: Subic Bay before and after withdrawal," Marine Policy, Elsevier, vol. 21(4), pages 325-344, July.
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    1. Barnard, H. & Cowan, R. & Müller, M., 2012. "Global excellence at the expense of local diffusion, or a bridge between two worlds? Research in science and technology in the developing world," Research Policy, Elsevier, vol. 41(4), pages 756-769.
    2. Guido Schwarz, 2006. "Enabling Global Trade above the Clouds: Restructuring Processes and Information Technology in the Transatlantic Air-Cargo Industry," Environment and Planning A, , vol. 38(8), pages 1463-1485, August.
    3. Barnard, Helena & Cowan, Robin & Muller, Moritz, 2010. "Global excellence at the expense of local relevance, or a bridge between two worlds? Research in science and technology in the developing world," MERIT Working Papers 2010-051, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    4. Bowen, John T., 2012. "A spatial analysis of FedEx and UPS: hubs, spokes, and network structure," Journal of Transport Geography, Elsevier, vol. 24(C), pages 419-431.
    5. Chun‐ping Chang & Yung‐hsiang Ying, 2008. "The Generative Power Of Air Freight In The Trade Openness – Economic Growth Nexus In African Countries," South African Journal of Economics, Economic Society of South Africa, vol. 76(3), pages 493-512, September.

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