Terrorism
Literature review
This chapter will provide a critical review of the economic impact of terrorism on the UK economy by summarizing, comparing and contrasting research undertaken by academics in this field. This, in turn, will also highlight those areas where further evidence is required to clarify meaning.
To see the impact of terrorism on the economy, the economy has to be defined, the time period over which the impact is being considered, how it is measured and which terrorist event are being talked about, all have to be looked at.
In so far as the economy is concerned, it is easier to measure using GDP for large economies such as the UK. The last 10 years period will be considered and I will focus on the September 11 2001attacks in the US and the July 7 and 21 2005 attacks in London. Economic impacts are long term in nature, so picking up just one or two terrorist events will necessarily not make a difference. If I was looking at just the reduction in the growth rate of GDP, then this means that people are not investing in products or production, economic activity has reduced or slowed or people are taking their money out of the economy and putting it in some other economy or purchasing gold. However, I am looking at the impacts of terrorism on the UK economy. The July 7 2005 bombings in the UK, for example, did not have any long term effects on the UK economy. But that is not to say that terrorism does not impact economies.
Terrorism does have a direct impact on certain aspects of the economy. Countries which are very heavily dependent on tourism get affected very badly. Take three examples, Indonesia, Kenya and Tanzania. Each of them was attacked by Al Qaeda or its affiliates. Indonesia was directly impacted by the first Bali bomb, Kenya and Tanzania impacted because of the US embassy bombings. In all the three cases, tourism was a relatively major part of their economies (ranging from 5% to...
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