Economic Impact Of Terrorism On Economy

1683 Words7 Pages
Impact of Terrorism on Economy Any terrorist incident not only aims to take human life and cause terror but it also has a huge negative impact on the economy of the region. In past, economics experts believed that theoretically, terrorism should not impact drastically on the economy of a region. The reason they put forward is that terrorist events only cause destruction to a limited area. Now these claims have been refuted by modern analysis of economic costs related to the aftermath of terrorism. Alberto Abadie has reviewed these economic impacts in his report titled "Terrorism and the world economy". Abadie states that "empirical estimates of the consequences of terrorism typically suggest large effects on economic outcomes" (Abadie 2). The effects on economy include immediate financial loss, investment loss and negative impact on the marketing.…show more content…
Abadie continues to explain the impact of terrorism on economy and states that "higher levels of terrorist risks are associated with lower levels of net foreign direct investment positions, even after controlling for other types of country risks" (Abadie 32). It is not surprising that foreign investors would not want to keep investing in a terrorist-hit region. All the business and development investments are done keeping in mind a number of parameters that also include peace and political stability of the region. So, any region that is affected by active terrorism is less likely to see foreign investments. Another indirect consequence of terrorism is the negative impact on marketing which causes financial instability to investing

More about Economic Impact Of Terrorism On Economy

Open Document