Air cargo services, the state and industrialization strategies in the Philippines: The redevelopment of Subic Bay

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.