Effect of Terrorism on a Country

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Effect of Terrorism on a Country

By | June 2008
Page 1 of 4
Effects of Terrorism to a Country

Terrorism affects a country in many ways. They affect the economy and the population living in that country.

Economical effect

Financial Market

There is no doubt among economists that wars, terrorism and political instability have a significant negative effects on the economies in which they take place. Recent economic literature investigates both the consequences of political violence and the mechanisms that transform this violence into economic damage. The economy of the country will drop rapidly. An example of the September 11 attack had significant economic repercussions for the United States and world markets. The New York Stock Exchange, the American Stock Exchange and NASDAQ did not open on September 11 and remained closed until September 17. New York Stock Exchange (“NYSE”) facilities and remote data processing sites were not damaged by the attack, but member firms, customers and markets were unable to communicate due to major damage to the telephone exchange facility near the World Trade Center. When the stock markets reopened on September 17, 2001, after the longest closure since the Great Depression in 1933, the Dow Jones Industrial Average (“DJIA”) stock market index fell 684 points, or 7.1%, to 8920, its biggest-ever one-day point decline. By the end of the week, the DJIA had fallen 1369.7 points (14.3%), its largest one-week point drop in history. U.S. stocks lost $1.2 trillion in value for the week. The attacks led to decreased travel, and as of 2006, the U.S. airline industry has not fully recovered. Insurance Claim

The attack on the World Trade Center led to huge insurance claims, with many insurance companies throughout the world having to disclose the impact of the attack in their financial statements. In April 2004, a jury of the United States District Court for the Southern District of New York rejected claims by World Trade Center leaseholder, Larry Silverstein, that two planes hitting the Twin...