Terrorism

The Global Impact of Terrorism on Economic Development

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Abstract
The research objective that is addressed in the context of this study was to assess the scope and implications of global terrorism on economic development by way of testing the null hypothesis of "There is no global impact from terrorism on economic development" and the alternate hypothesis of "There is global impact from terrorism on economic development." The research method that was employed for undertaking this study concerns the exploratory study to collect pertinent secondary data and suitable qualitative analysis. The key outcome of this study is that the relationship between terrorist attacks / incidents as well as economic development exists. This relationship, however, changes across the income groups. In this context, the hypothesis of the study is disapproved and confirms that terrorism impacts countries across many different ways and important one amongst them is adverse economic development.
Table of Contents
Abstract    i
Introduction    1
Literature Review    2
Terrorism: A Background    2
Terrorism: Different Forms    3
Terrorism: Economic Consequences    4
Theory & Hypotheses    8
Hypotheses    10
Research Design & Data    11
Research Design    11
Research Methods & Data Collection    11
Research Plan    12
Findings & Analysis    12
Conclusion    17
References    19
Introduction
Terror as well as terrorism could result in substantial levels of losses for any economy with respect to nations. The losses shall chiefly be on account of the uncertainties which are brought in by way of the confidence which is lost on account of terrorism as well as the transference concerning significant portions pertaining to the resources of country towards the military expenditure (Audu and Adam 2016; Huerta Barrientosa and Longoriaa 2016; Frey and Osterloh 2017). In the other end, terrorist could in addition target in a direct manner critical sectors of the economics. The same leads to suggestions that overall purposes concerning terrorism that aims in attaining the political as well as economic demands over an illegitimate manner, represents the clear as well as evident indications for a government in being intimidated as well as create horror and fear within a society (Audu and Adam 2016; Huerta Barrientosa and Longoriaa 2016; Frey and Osterloh 2017). In different terms, overall purposes concerning terrorism lies in attaining specific political goal in the manner of creating significant pressure over the political authorities as well as affecting public interests by way of violence. In the manner described, terrorism effectively creates horror as well as fear within the society, posing an adverse threat across various domains, chiefly with respect to economy of a nation. Hence, on account of deeper influence concerning terrorism over social as well as political life concerning a country, then same in addition impacts economic development in an adverse manner (Audu and Adam 2016; Huerta Barrientosa and Longoriaa 2016; Frey and Osterloh 2017). The core reason with respect to the targeting of an economy, overall situation of the economic development shall be that it shall be highly critical indicator for success. In actual, terrorist activities, irrespective of targeting towards the disruption of macroeconomic stability across the nation, includes the economy, overall successes concerning the activities lies in the formation of effective forms of violence within the society (Audu and Adam 2016; Huerta Barrientosa and Longoriaa 2016; Frey and Osterloh 2017).
The research objective that is addressed in the context of this study was to assess the scope and implications of global terrorism on economic development by way of testing the null hypothesis of "There is no global impact from terrorism on economic development" and the alternate hypothesis of "There is global impact from terrorism on economic development." The research method that was employed for undertaking this study concerns the exploratory study to collect pertinent secondary data and suitable qualitative analysis. The key outcome of this study is that the relationship between terrorist attacks / incidents as well as economic development exists. This relationship, however, changes across the income groups. In this context, the hypothesis of the study is disapproved and confirms that terrorism impacts countries across many different ways and important one amongst them is adverse economic development.
Literature Review
Terrorism: A Background
Terrorism refers to pre-meditated form of threats to utilize violence, or else, use violence by sub-national groups or individuals for attaining any social or else political objectives by way of intimidation over large set of audience, over and above the immediate victims (LaFree et al. 2014; Audu and Adam 2016; Huerta Barrientosa and Longoriaa 2016). However even if overall motivation of the terrorists could vary, their respective actions shall follow standard and common patterns in terms of terrorist incidents representing varied different forms like that of kidnappings, airplane hijackings, threats, assassinations, suicide attacks, and, bombings. The terrorist attacks shall be intended for applying adequate pressures over the relevant government such that the said government shall grant the specific political concession that is sought. In case the government which is besieged notes these anticipated costs concerning future actions of terrorists to be greater as compared to costs from conceding the demands of the terrorists, then the government may make certain accommodation (LaFree et al. 2014; Audu and Adam 2016; Huerta Barrientosa and Longoriaa 2016). Hence, the rational form of terrorist organization could, at the principle level, attain the goals faster if the same shall possess the ability for augmenting the overall consequences concerning the said campaign. The various consequences could hold various forms inclusive of casualties; buildings destroyed, heightened levels of anxiety, as well as varied set of economic costs (LaFree et al. 2014; Audu and Adam 2016; Huerta Barrientosa and Longoriaa 2016). In an evident manner, overall attacks during 11th September, 2001 (“9 / 11”) in United Stated possessed significant levels of costs which had been later estimated in being between the ranges of Us Dollar 80 Billion and US Dollar 90 billion inclusive of the ensuing economic / financial losses by way if reduced levels of commercial activities, compensations to the workmen, lost wages, etc. (LaFree et al. 2014; Audu and Adam 2016; Huerta Barrientosa and Longoriaa 2016).
Terrorism: Different Forms
Terrorism shall come about as two critical forms – transnational as well as domestic (Strang and Alamieyeseigha 2015; Petkova et al. 2017; Frey and Osterloh 2017). The domestic terrorism can be stated to be homegrown having consequences over concerned host nations solely, the affiliated institutions, property, citizens, policies, etc. The transnational terrorism shall comprise more than a single nation (Strang and Alamieyeseigha 2015; Petkova et al. 2017; Frey and Osterloh 2017). The underlying international aspect could arise from the targets, victims, supporters, institutions, implications or else terrorists. To take an example, 9 / 11 attack represents transnational form of terrorist event as the impacted victims had been from numerous and diverse nations, overall mission being financed as well as planned in the foreign location, terrorists themselves being foreigners, as well as the overall implications concerning this event in terms of security, financial aspects, etc. were of global nature (Strang and Alamieyeseigha 2015; Petkova et al. 2017; Frey and Osterloh 2017). The hijacking which shall originate from one nation and yet ends in the different nations represents the example for transnational terrorism and so shall be the assassinations undertaken for political motives concerning the foreigner in the city streets. The transnational form of terrorist attacks usually encompass trans-boundary externalities, that is, authorities or else actions from one nation imposing the uncompensated form of consequences over property, person, etc. in different country. Hence, the spillover costs could ensure such that overall economic impacts from the terrorist events could transcend concerned host nation (Strang and Alamieyeseigha 2015; Petkova et al. 2017; Frey and Osterloh 2017). The attacks over World Trade Center building during the 9 / 11 attack led to the killing of numerous British nationals as well as led to ramifications with respect to United Kingdom based financial institutions. Studies have illustrated that 9 / 11 attacks influenced negatively the average returns in stock markets across the globe (Strang and Alamieyeseigha 2015; Petkova et al. 2017; Frey and Osterloh 2017). In actual, eleven days cumulative level average of abnormal returns was larger in Hong Kong, Italy, Switzerland, Amsterdam, Toronto, Paris, Frankfurt, and London stock markets as compared to New York Stock Exchange post 9 / 11 attacks (Strang and Alamieyeseigha 2015; Petkova et al. 2017; Frey and Osterloh 2017).
Terrorism: Economic Consequences
Terrorism could lead to the imposition of costs over the targeted nations by way of varied different set of avenues (Bueno Solano and Cedillo Campos 2014; Enders et al. 2016; Estrada et al. 2015). The incidents of terrorism possess economic consequences in the form of diverting the foreign direct investments (“FDI”), destruction of infrastructure, re-direction of the public investment related funds towards security, or else, adversely affecting trade (Bueno Solano and Cedillo Campos 2014; Enders et al. 2016; Estrada et al. 2015). In case of the developing nations the loss in the form of FDI reduction can lead to reduction in the economic growth as FDI represents key source for savings in these nations. In the same manner as external capital may takes flight from the nation that is plagued with civil wars, the intense form of terrorist campaigns to the sufficient extent could significantly bring down the capital inflows (Bueno Solano and Cedillo Campos 2014; Enders et al. 2016; Estrada et al. 2015). In essence, terrorism akin to the civil conflicts could result in the spillover costs amongst the nations neighboring with the terrorist campaigns across the neighbor lead to the dissuasion of the capital inflow, or else, the regional multiplier impacts lead to lost economic activities with respect to the terrorism ridden nation in resonating all through the specific region (Bueno Solano and Cedillo Campos 2014; Enders et al. 2016; Estrada et al. 2015). In certain cases, terrorism could affect specific nations akin to 9 / 11 did across the airline sector as well as the tourism sectors. The other costs concerns the expensive forms of security measures which need to be suitably instituted post the larger attacks like for example massive outlays of homeland security post the 9 / 11 attacks (Bueno Solano and Cedillo Campos 2014; Enders et al. 2016; Estrada et al. 2015). In addition, terrorism raises overall costs for undertaking business operations with respect to higher levels of premiums on insurance, security precautions that are expensive and increase costs, as well as increase in salaries for the employees at risk (Bueno Solano and Cedillo Campos 2014; Enders et al. 2016; Estrada et al. 2015).
The overall size as well as diversity concerning any specific economy has much to be linked with overall ability of the specific country in withstanding the attacks from terrorist without facing any significant forms of economic impacts (Snarr and Snarr 2016; Bilgel and Karahasan 2017). For example, the shipping industry at Yemen suffered to a great extent post attacks from the terrorist over USS Cole as well as Limburg had diverted about half of the port activities from Yemen to the other various facilities that are competitive across Oman and Djibouti on account of 300 per cent increase with respect to the premiums on insurance. In the highly developed as well as diversified economy, the losses of these forms could have influences that are temporary on account of the fact that resources get re-allocated towards other various sectors or else effective forms of security measures shall be deployed for purposes of allaying the concerns (Snarr and Snarr 2016; Bilgel and Karahasan 2017). In addition, developed economies possess effective forms of fiscal as well as monetary capabilities for limiting the macroeconomic impacts from terrorist attacks as...