Terrorism unjustly targets innocent civilians to advance ideological, political, or religious agendas through violence and intimidation. Beyond horrific losses of life and health, acts of terror also create destructive economic ripples undermining economic rights and development. From business disruptions to unemployment, inflation, and reduced investment, terrorism imposes severe financial hardship on affected populations. Understanding these economic impacts underscores the urgent need to continue confronting terrorism through various means.
Lost Productivity And Growth
When terrorism threats disrupt transportation, trade, and tourism, economic productivity and growth falter as commerce, services, and production grind to a halt. The 9/11 attacks cost New York City an estimated $2.8 billion daily in lost GDP as all activities ceased. Global GDP declined $330 billion after 9/11. Fear-induced changes in how people work, shop and travel also drag down consumer spending and business investment, stymying economic growth long-term.
Following terrorist events, unemployment often spikes due to declines in economic output, disruptions in labor supply chains, reluctance in hiring, and damages to critical infrastructure. 9/11 saw New York City lose 143,000 jobs immediately. Terrorism stifles job creation by fueling uncertainty and diverting investment to security instead of employment. Decreased business revenues can necessitate painful layoffs as well. Unemployment breeds poverty and its attendant social ills.
Supply Chain Breakdowns
Modern economies rely on complex supply chains for raw materials, manufacturing, and distribution of goods. Terrorism can decimate finely honed supply networks through the destruction of infrastructure like ports, railways, roads, and pipelines. Shipping companies may halt services over danger concerns. Importing critical agriculture and energy inputs becomes difficult, causing shortages and inflation. Reestablishing supply chains is slow and expensive. Vulnerable populations suffer the most.
Reduced Domestic And Foreign Investment
By creating uncertainty and instability, terrorism repels business investment, depriving economies of growth capital. Consider the $300 billion in stock value erased when financial markets reopened after 9/11. Property and assets risk damage as well, further deterring investors. Tourism also plunges out of security fears. Overseas investors in particular may deem countries with recurrent terrorism too volatile and unsafe for deploying long-term foreign direct investment.
Terrorist attacks often damage infrastructure and disrupt distribution hubs, reducing available supplies of raw materials, energy, and food. Shortages quickly drive price inflation, especially for staple household goods. Foreign oil or food imports may be cut off. Governments may also print money to finance rebuilding efforts or implement stimulus programs, further driving inflation. Low-income households have few options when essential items become unaffordable.
Increased Public Borrowing
To fund heightened security expenditures following terrorism, governments usually borrow heavily, driving up public debt. Providing economic relief and reconstruction aid, fortifying vulnerable sites, purchasing advanced equipment and surveillance systems, and military deployments strain national budgets for years following major attacks. Rising interest costs on this debt divert public funds from productive uses like infrastructure, health, and education.
Mobilizing Resources Against Terrorism
Terrorism’s economic toll underscores the urgent need to continue striving to eradicate violent extremism in all forms, from robust diplomacy and cooperative law enforcement to initiatives preventing radicalization and extremist manifestations. Dedicated organizations that fight domestic terrorism through education, mentorship, and community-led reform play a crucial role in this mission and deserve sustained public and private support.
Psychological Effects On Spending
Beyond direct damage, terrorism breeds fear, anxiety, and weakened consumer confidence that suppresses economic behavior. People tend to avoid public gatherings, travel, and high-profile landmarks following attacks. Industries like entertainment, tourism, hotels, airports, and retail suffer lower spending. Households also cut discretionary purchases, save more, and pay down debts in uncertain times. Dampened consumption can extend recessions.
Inequality And Social Costs
While headline GDP figures may recover within months of terrorist incidents, economic inequality worsens considerably. Lower-income groups have minimal financial cushions and suffer most from unemployment, inflation, and austerity cuts to social programs in terrorism’s aftermath. Wealth largely protects the affluent. Women, minorities, children, the disabled, and the elderly endure pronounced burdens. Dignity and cohesion fade.