The Economics of the US Military Bases in the Philippines

Abstract

This article examines the existence of the US Military Bases in Clark and Subic, Philippines vis-à-vis the Philippine economy in terms of the size and impact of base related spending and the potential for enhanced return under existing conditions. Also, whether the presence of US military facilities in the Philippines and the consequent activities of the US government have an impact on economic policy making of the country was also analyzed in this article.

In assessing the direct impact of bases spending on the Philippine economy, a comparison between the bases expenditure and GNP and exports was applied. Treatment of the data revealed that the bases expenditure/GNP ratio fell from 45% to 35% in 1985 and 1987 respectively. The analysis revealed a declining trend in the economic importance of the bases to the Philippines which mean that the cost of closing the bases are real but not overwhelming in the long run. The costs involved when the bases are closed, directly affect the economy of the communities surrounding the bases. However, this can be compensated by a sustainable base conversion program.

In the final analysis, the effect of closing the bases is not substantial to derail the economy of the Philippines, however, if the role of the government is maximum compensation, it can demand substantial amount from the US government for their bases to be retained here.