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“TERRORISM”Common definitions of terrorism refer only
to those violent acts which are intended to create fear (terror), are perpetrated for a religious, political or ideological goal, deliberately target or disregard the safety of non-combatants (civilians), and are committed by non-government agencies.
Some definitions also include acts of unlawful violence and war. The use of similar tactics by criminal organizations for protection rackets or to enforce a code of silence is usually not labeled terrorism though these same actions may be labeled terrorism when done by a politically motivated group.
Pejorativism OF THE TERM… There is the famous statement:
“One man's terrorist is another man's freedom fighter.”
But that is grossly misleading. It assesses the validity of the cause when terrorism is an act. One can have a perfectly beautiful cause and yet if one commits terrorist acts, it is terrorism regardless.”
ORIGIN OF THE TERMTerror" comes from the Latin verb terrere meaning "to frighten”.
In November 2004, a United Nations Secretary General report described terrorism as any act "intended to cause death or serious bodily harm to civilians or non-combatants with the purpose of intimidating a population or compelling a government or an international organization to do or abstain from doing any act".
TYPES OF TERRORISMCivil disorder Political terrorism Non-Political terrorism Limited political terrorism Official or state terrorismSocial revolutionary terrorismNationalist-separatist terrorismReligious extremist terrorism
In this paper, we examine the impact of terrorism and warfare on international trade.
Identify the effect of terrorism on trade empirically.
We find that violence strongly affects the pattern of trade; countries that are plagued by a larger number of terrorist attacks trade significantly less with each other.
Relationship B/w politics & TerrorismA large and diverse body of literature has documented the relationship between political variables and international trade.
One line of research focuses on the impact of trade on political conflict (mutual trade dependencies diminish hostility and promote cooperation )
Another line of research studies the impact of political factors on trade (trade flows are greater between countries with common interests and similar democratic institutions )
While the impact of terrorism on trade may vary across time and place, violence and warfare generally imply additional costs for transactions so that, if anything, we would expect a negative association between terrorist activity and the volume of trade.
There are at least three principal ways in which warfare may be a hindrance to international trade... These are.....
First, terrorism leads to insecurity and thereby raises the costs of doing business.
Second, the typical response to an increase in terrorist activity is an increase in security measures. Stronger security regulations, however, imply that trade becomes more expensive, such as by increasing delivery times.
Third, there is the risk of a direct destruction of traded goods, disruption of industry supply chains or destruction of particular transport modes
Impacts of terrorism
Mainly two type of effects:-
1. Short Term Impacts.
2. Long Term Impacts.
SHORT term IMPACT OF TERRORISM1) Loss of Human Capital
The human costs have been horrendous. Estimates are in past 5 years 4000+ were killed in terrorist attacks. This puts India next to Iraq both in terror deaths and terror incidents. The recent 26/11 Mumbai attacks itself left 257-300 dead and 700 injured which.
2) Investor BehaviorFrequent attacks on commercial & government institutions shatter the confidence of the investors causing heavy investment drainage. One example of the same is the terrorist attack in Indian Parliament in 2001, which internationally provoked insecurity & discouraged the investors (FII's & FDI's), obstructing the economic growth.
SHORT term IMPACT OF TERRORISM(Cont…)3) Short Term Financial Loss
Post 26/11 the Taj & Trident Hotels incurred heavy loss as operations were halted for 3-4 months. After 26/11 Mumbai attack Pak cricket team had to cancel its Mumbai tour due to which BCCI has incurred a loss to the tune of INR 120 crore. Another such incident was Post Ex-PM Indira Gandhi's assassination 1984 riots which hit the economy severely especially the Agriculture & Transport industry that lost hundreds of crores
4) Retrenchment effect on Specific IndustriesThe Jaipur serial blasts, J&K Terrorism & Mumbai 26/11 attacks did have immediate and concentrated impacts on a number of industries: most notably, airlines, aerospace, travel, tourism, insurance, lodging, restaurants, recreation and related activities. Gross earnings from foreign tourists are currently around 1% of GDP. Post 26/11 terrorist attack estimates suggest that nationally hotels have seen about 60% booking cancellations. Hotel occupancy in western India is down some 25%
Long term IMPACT OF TERRORISM
1) Political InstabilityThe assassinations of 2 Ex-PM of India, Mrs. Indira Gandhi, Mr. Rajeev Gandhi already had jolted Indian politics & economy at large. India had lost 2 of its strongest pillars which otherwise would have taken Indian politics, Business & industry at unimaginable heights. Recently speaking the siege of South Mumbai has taken toll as home minister Shivraj Patil, Chief minister Vilasrao Deshmukh & Home minister R.R. Patil had to resign. This further unstabilized the Indian industry from a long-term perspective. The Political instability at times have also let to erosion of FII's & FDI's.
IMPACT OF TERRORISM(Cont…)
2) Global ImplicationsIndia, post Kargil war then Attack on Parliament now 26/11 has lost millions of business as the trade link between the two countries are frozen during such period. Agri-Exporters in bordering states have taken heavy burns. This has resulted in unemployment in these regions, which in turn again triggers riots. 26/11 Attack involved foreign hostages and places where business leaders, executives and foreigners frequented.
IMPACT OF TERRORISM(Cont…)3) Long Term Financial Loss
The direct economic damage done by terrorist attacks: buildings and infrastructure destroyed, productive lives ended. The structural damages post 26/11 attacks was amounting to total of INR 500 crores, which subsequently took its toll on the insurance industry. Another form of longer-term costs security involves the opportunity cost of spending additional money to fight terrorism. Currently India ranks on 9th position in the world for highest military expenditure (2009-10),
Major terrorist incidentsThe Wall Street bombing at noon on
September 16, 1920 killed thirty-eight people and injured several hundred.
Attack on World Trade Centre of New York City on 11th Sep. 2001.
Attack on Indian Parliament on 13th Dec 2001.
Terror attack on Hotel Taj & CST Railway station on 18th Nov.2008.
Attack on 2 nightclubs in Bali simultaneously on the night of 12th October 2002.
Mumbai C.S.T. aftremath…
Aftermath 9/11…
9-11 Attack & its EffectFollowing the September 11, 2001,
terrorist attacks on American soil,much shock reverberated around the world.
Following the September 11, 2001, terrorist attacks on U.S. soil, feelings of uncertaint immediately ensued regarding national security as fear loomed of possible future attacks.
The Impact of 9/11 on the US Stock MarketAn examination of the Dow’s movements
following terrorist attacks against US interests is conducted simply to gauge the stock market during periods of uncertainty brought about by fear and shock.
In the meantime, Table I highlights the Dow Jones’s resilience to terrorist attacks against U.S. interests.3 Indeed, the U.S. stock market has demonstrated remarkable resilience to terrorism since the 1920 Wall Street bombings which resulted in 40 deaths.
Effect On Dow Jones Index Aftermath …
The Impact of 9/11 on US Economic GrowthWhile, overall, the 9/11 attacks had a minute
impact on the US economy, New York’s economy endured a direct impact, both to its private and public sector areas.
“The destruction of physical assets was estimated in the national accounts to amount to $14 billion for private businesses, $1.5 billion for State and local government enterprises and $0.7 billion for Federal government. Rescue, cleanup”
Hike In International Oil Prices
EFFECT On consumer Expenditure power
Fall in FDI Due To Infection With Terrorism
InferenceTerrorism violence strongly affects the
pattern of trade; countries that are plagued by a larger number of terrorist attacks trade significantly less with each other as violence and warfare generally imply additional costs for transactions so that, if anything, we would expect a negative association between terrorist activity and the volume of trade.
THANK YOU…
