Terrorism’s Impact on Global Economic Activity
As we all know, terrorism has many impacts on people and the world that we all live
in. Specifically, international terrorism can be viewed as something that can negatively affect
the world in many ways. The first thing that comes to mind when thinking of international
terrorism is destruction, death, and fear; international terrorism impacts the world more than
just destruction, fear, and death. Terrorism can also affect the global economic activity. In
more detail, terrorism can impact the global economy through physical destruction and
tourism.
The first way that terrorism can affect the global economy is physical destruction.
Physical destruction is an obvious aftermath of terrorism. I stated that there is more to
terrorism than destruction, but physical destruction is related to terrorism by affecting the
economy. Terrorists tend to destroy “existing plants, machines, transportation systems,
workers and other economic resources” (Ross). With the destruction of these things, it costs
the economy a ton of money. On most occasions, lots of these places that terrorists destroy
are government owned property. This leads to a cost for the government to repair these
damages done. Other places that also are usually attacked by terrorists are smaller scale
places such as churches, roads, and stores. An example of a large-scale attack that costs the
economy a lot of money was the attack on the Twin Towers on September 11th, 2001.
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According to the New York Times, the attacks on the Twin Towers cost the U.S. economy
about “$3.3 trillion, or about $7 million for every dollar Al Qaeda spent planning and
executing the attacks” (Carter). This number makes up many different things such as toll and
physical damage, economic impact, homeland security, war funding, and future war and
veterans’ cost. When breaking the 3.3 trillion down, about 55 billion dollars was spent on toll
and physical damage. The destruction of the World Trade Center buildings cost about $8
billion. Also, the cleanup of these buildings cost about $1 billion. Something that was
interesting, but tragic to learn about, was the fact that people who lost their lives because of
these attacks “would have earned around $10 billion over the rest of their working years”
(Carter). Reading this fact can open eyes to many people about the major impact terrorism
has economically. These people who lost their lives, which we can predict were most likely
successful, could have earned the economy this money that could have been generated
throughout the years. Losing these lives also affected the companies who these people
worked for. The companies lost a ton of valuable employees that could have kept their
business constantly growing and successful through the years.
These companies losing their employees leads us to the actual economic impact of
9/11. The attacks made an economic impact of about $123 billion. The most interesting part
of this section is the amount of money lost due to reduced airline travel. The amount lost due
to air travel was $39 billion. After 9/11, the world was shocked and scared; the U.S. of
course was more scared than any other part of the world. After the attacks, the federal
government decided to close all airports to prevent any future attacks. The closing of the
airports caused airlines to lose money and people who worked at the airlines to be out of a
job. Even though the airports eventually opened, people were so afraid to fly that there was a
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decrease in air travel. According to USA Today, “airlines experienced at least a 30 percent
reduction in demand during the initial shock period immediately following the reopening”
(Logan). The most impactful part of all of this that affects the economy the most is war.
After 9/11, the amount of money that went into the war in Iraq and Afghanistan was “$1,649
billion” (Carter). To break this down more, the war in Iraq was an estimated amount of $803
billion and Afghanistan was about $402 billion. These numbers represent the more horrible
effects of terrorism on the world. If 9/11 did not occur, this money could have been spent on
better things in this country such as education, health, etc. These numbers also continue to
grow because of the money put towards the future of these veterans who fought in the war.
Veterans also have a good chance of having disabilities after war. According to the New
York Times, Linda J. Bilmes, a Harvard academic, “estimated that the total cost of health
care and disability for veterans of the Iraq and Afghan wars will be at least $589 billion over
the next 40 years” (Carter). With these statistics, we can say that terrorism has a major
impact on the economy because of the destruction it causes towards the world and its people.
Another example we can use to see what impact terrorist attacks have on the economy
is its effect on the financial markets. This is very similar and can also relate to the attacks on
September 11th and its effects on the economy. Since the World Trade Center is the financial
center for the country, destroying it quickly causes markets to be disrupted. To be more
specific, the most damage caused to the U.S by these attacks on the World Trade Center was
on the Bank of New York. According to R. Barry Johnston and Oana M. Nedelescu, writers
of The Impact of Terrorism on Financial Markets, the “Bank of New York and J.P. Morgan
Chase, the two main clearing banks for government securities, had to relocate to backup sites
as their main centers of operations were located just a few blocks from the World Trade
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Center.” This relocation caused the bank to have disruption in “clearing and settlement,
raising uncertainty about the completion of trades and demand for liquidity.” Without going
into much detail, another financial market that was destroyed was the repo market.
The second thing that terrorism all over the world impacts is tourism. Tourism seems
to be impacted by terrorism because of the fear tourists generate travelling to these countries
that have been attacked. Over the recent years, European tourism has been majorly impacted
by terrorism. There have been attacks in places such as Brussels, Paris, and even Germany.
Since these attacks are generating fear for these tourists, businesses, large and small, are
being badly affected because of the lack of people visiting these countries and its cities. For
example, Georges Panayotis, president of a tourism consulting company in Paris, stated that
“We are experiencing a structural change, a phenomenon of war on our doorstep that didn’t
exist before, and if it’s not resolved, then the problem will continue” (The NY Times).
Panayotis is speaking about the problem that the economy is facing because of the lack of
tourists visiting Paris. Since the attacks on Paris in November of 2015, a chain of local hotels
and restaurants at the Mont-Saint- Michel “slumped by up to 70 percent” (Alderman).
Another terrorist attack in Europe that had a negative impact on tourism in Europe
were the attacks in Nice that happened on Bastille Day. These hotels and restaurants
continued to lose business as “cancellations jumped by 20 percent” (Alderman). According
to the Telegraph, these attacks in Nice also caused the hotels in that city to suffer “a 45 per
cent fall in revenue in the two weeks after the July 14 attack on the seafront Promenade des
Anglais” (Chazan). These attacks have caused the French government to try to promote
France as a safe place for tourists and journalists to travel to. The government has tried to
“patrol tourist sites and beaches by armed soldiers and police” (Chazan), but these attempts
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have not been much successful, especially since the government has noticed that many
foreigners are avoiding places like Disneyland Paris.
The physical destruction that terrorism does ends up negatively affecting the economy
because of the costs of damage it does. As stated earlier, 9/11 cost the U.S. government $3.3
trillion because of the damage done by the planes, but also because of the people these
attacks took and the war that came after the attack. Tourism is also negatively affected by
terrorism. Tourism is huge in Europe but these attacks that have been targeted against
European countries have been causing tourism to decrease which leads to tourism sites in
Europe to lose business. We can conclude that not only terrorism takes lives, but it also is
awful when it comes down to negatively impacting economic global activities.
Citations:
Alderman, Liz. "Terrorism Scares Away the Tourists Europe Was Counting On …" New
York Times. N.p., 29 July 2016. Web. 21 Oct. 2016.
Carter, Shan, and Amanda Cox. "9/11 : The Reckoning." New York Times. N.p., 8 Sept.
2011. Web.
Chazan, David. "Paris Hotel Occupancy Rates Halve as Tourists Abandon France in Wake
of Terrorist Attacks." Telegraph. N.p., 7 Aug. 2016. Web.
Johnston, R. Barry, and Oana Nedelescu. "The Impact of Terrorism on Financial Markets."
N.p., n.d. Web. 21 Oct. 2016.
Logan, Gabi. "The Effects of 9/11 on the Airline Industry | USA Today." USA Today. N.p.,