Terrorism and Global Business

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Terrorism and Global Business


From the invasion of France in 1940, to the Korean air bombings in 1987, to one of the most recent and publicized incidents dubbed the 9-11 attack, terrorism has plagued our world nations for decades. As defined by the League of Nations in 1937, terrorism is "all criminal acts directed against a State intended or calculated to create a state of terror in the minds of particular persons or persons in the general public." James M. Poland, a professor of criminal justice at California State University, gives a slightly different definition. He states that "terrorism is the premeditated, deliberate, systematic murder, mayhem, and threatening of the innocent to create fear and intimidation in order to gain a political or tactical advantage, usually to influence an audience."

The perception of terrorism is of a subjective nature: a man defending his nation may be seen as a terrorist to some, but a hero to others. However, no matter the perception, terrorism has an effect on the activities of businesses and profoundly impacts the world's economy: many lose their lives; others lose their homes and source of income as a result of a terrorist attacks. Terrorism forces the reallocation of scarce resources of an economy in an effort to meet the dire needs of its citizens. Small islands such as Grenada would eventually experience higher cost of living as a result of attacks elsewhere in the world.

In the research paper, we shall be focusing on the effects of terrorism on the business activities of countries as a whole, as well as on organizations and individuals. Our research aims to show mainly the negative effects of terrorism in large nations such as United States, and then trickle down to its effects on the Grenadian economy and the Grenadian citizen.

Effects on Targeted Nations

Immediate Effects

The costs of terrorism are grave. The terrorist attacks on Pearl Harbour, the World Trade Centre, the Pentagon, London train stations, London Airports, US Embassies in foreign countries and even the oil wells in Iraq all have both immediate and post consequences. Some of the immediate effects of terrorism, occurring 0 to 6 months after an attack, will now be discussed.

Destruction of businesses and employment

Terrorism causes destruction. Entire businesses are destroyed and serious damage is caused to others. Business buildings, infrastructure, equipment, machinery and important documents and records were obliterated in the 9/11 terrorist attack. But what are the costs of such destruction? According to Robert Looney (2002), in an article about the economic costs of 9/11 to the United States, "Lower Manhattan lost approximately 30 percent of its office space and a number of businesses ceased to exist….. 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 enterprises."

Naturally, the destruction of businesses leads to loss of employment. "Close to 200,000 jobs were destroyed or relocated out of New York City, at least temporarily" (Robert Looney 2002) after the 9/11 attacks. Assuming that these 200,000 jobs each belonged to 200,000 different people, this would be approximately equivalent to the working population of Grenada multiplied by five.

And the chain reaction continues. The follow up to the above mentioned destruction is a loss in productivity and a decline in economic activity. Productivity immediately drops not only because of the destruction of businesses and loss of jobs, but also because of fear: those heading to work would turn back; those already at work would leave; managers and bosses would send their workers home and close their businesses. There would consequently be less production occurring immediately after a terrorist attack. Economic activity would also be affected. After the London Train...
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