The Rise of Local Industries in Olongapo City After the Exodus of American Armed Forces

Abstract

Olongapo City’s rise as a highly urbanized city is one that is well-regarded and modelled after by local governments around the world. Its local government’s innovations in local governance and its success in reviving its economy after the twin catastrophes - the closure of the Subic Naval Base and the eruption of Mt. Pinatubo -are emulated by many cities worldwide. The Subic Naval Base was the city’s economic anchor until its closure in 1991. The military facility drove the city's local economy as the business sector of Olongapo geared itself to fully support the base. But as a drawback of that set-up, Olongapo City failed to develop its own industry that could have generated more revenues with reduced costs. The sudden closure of the military base aggravated by the destruction brought by Mt. Pinatubo’s eruption therefore caused the local economy of Olongapo City to literally melt down. In effect, residents started to worry about the future of Olongapo City. A lot of people were out of jobs, businesses closed down, and residents migrated out. But almost two decades after the twin catastrophes, Olongapo City’s economy stands renewed. The establishment of the Subic Bay Freeport Zone filled-in the massive hole left behind by the military base and breathed life back into the city’s local economy. This paper focuses on the rise of Olongapo City’s local industries after the pull-out of the US naval base. Using the Location Theory, the researcher sought to find the locational factors that attracted businesses to establish in the city and allowed them to flourish. Using also the concept of economic development, the researcher sought to find out the impacts of local businesses on the city’s local economy and compare the military-driven economy of Olongapo City with its post-base economy to validate the claims of the Peace Dividend Theory.