Terrorism is the use of violence and/threat by individuals, groups, or corporations to intimidate a larger audience in order to achieve a political, corporate, personal, or even social goal. Though the aims and motives of terrorists may be different, their general actions are mostly executed in similar patterns of hijackings, kidnappings, assassinations, bombings, suicide attacks, and threats.
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It has always been a part of world history, however, more prominent in some areas than others. The 9/11 attacks in New York, however, awakened the world to a new awareness of the realities of terrorism, and every country has since had its own fair share of terrorist acts.
It would be naïve to assume that this act is only a concern for developed countries, as developed and developing countries alike are also in one way or the other dealing with terrorism and its consequences. There are two essential forms of terrorism – transnational and domestic.
Transnational terrorism is the form with activities and implications involving more than one country. An act of terrorism can be made transnational either by reason of the terrorists, victims, or the implications. A clear example would be the 9/11 attack in New York; this is considered transnational terrorism because the perpetrators of the attack were foreigners, the victims included people from different countries, and the implication of the attack was a global one.
In contrast, domestic terrorism is bred within a target country and the consequences are directed only at the government, citizens, policies, institutions, and properties of that particular country. The effects are numerous, but one of such (which is the focal point of this article), is its impact on the business front. A country’s ability to attract and sustain investments and business opportunities is directly affected by this act, leaving the continued growth and development of world economies in the ability of governments to eliminate terrorism.
There is a significant threat that terrorism poses to business, both nationally and internationally. Acts of terrorism result in the loss of lives, which arguably steadily reduces a certain percentage of the workforce. The loss of properties as a result of terrorism also includes significant infrastructures, which are supposed to be earmarks of economic development.
Other economic consequences that can be incurred through this act include: redirecting public investments to security, and diversion of foreign direct investments (FDI). When a country suffers a significant loss of its foreign direct investments, it ultimately affects its economic growth. Domestic types in itself could lead to the isolation of the affected country, where foreign investors avoid doing business in the country, tourists and international visitors also consciously stay away for security reasons, this means that the country loses out great income both on the aviation and tourism front.
The size, stability, and diversity of an economy have a lot to do with the resultant effect of terrorist attacks on the country. In diversified and developed economies, there might not be visibly significant economic effects, as resources can be reallocated to other sectors, with better security measures geared at alleviating fears and concerns. Smaller or developing countries, on the other hand, might not have the monetary and fiscal policies in place to reduce the macroeconomic impacts of terrorism. With the incessant rate of terrorist attacks, many citizens of the world have continued to live in fear and the feeling of insecurity. There is also a huge number of people losing their jobs because of the huge percentage of resources being gulped up in the fight against terrorism.
Researchers of the International Monetary Fund, Barry Johnston and Oana Nedelescu stated that the effects of terrorism can be direct or indirect. The direct effects of these acts of terrorism on the economy can be considered short-term in nature, involving the destruction of life and property, restoration of these infrastructures, provision for displaced people, provision for victims and family members, etc. Indirect costs, on the other hand, have more lasting effects like robbing investors of their confidence, endangering international relations, and increased expenditures which may lead to increased borrowing and incurring more debt.
The impact of terrorism on business can be enormous. It can result in unemployment, deflation, alongside other social and economic ills. The contributory role of business (both local and international) for many countries is so great that any downturn in the industry is a major cause of concern for many governments. The repercussions are evident in many segments: airlines, hotels, restaurants, banking, and SMEs that all contribute to a country’s development.
The truth is that most of us have little or no control over terrorism and its perpetrators and as such, we feel powerless. This in itself makes us afraid and angry, because our survival and security (which are the basic human needs) are being threatened.