Terrorism has been a means by which some groups achieve their political goals. The groups resort to using attacks that are usually targeted at specific economies. Terrorism involves the constant use of violence or threat to use violence to obtain a political or social objective. Terrorism often ends with massive loss of innocent lives and other destructions, which can cost so much on the both economic, political, and social growth of a nation. We are, therefore giving you the impact of terrorism on international trade.
The impact of global terrorism on international trade is devastating, especially to economically unstable countries. Foreign investors and businesses face the realities of global terrorism because they are the closest to this tragedy.
Destruction of property and loss of lives
The most direct impact is the destruction of property and the massive loss of innocent lives. Terrorism leads to the damage of property such as machines, plantations, roads, and other viable economic resources. Since terrorism involves the use of dangerous means such as bombing, many innocent lives are lost in the process.
The bombings have cost so much on the economic resources of many countries participating in international trade. Physical destruction also leads to the loss of the most productive resources that could generate valuable goods.
The impact on insurance
It is evident that not all insurance companies will accept to cover the losses caused by terrorism. This is because the losses may be too much for the company. Terrorism is a risky game for investors and everyone else, and this does not leave insurance companies out. They fear such risks just like everyone else.
Loss of foreign investment
The willingness of foreign investors to invest is influenced by several factors, including prior experience, level of risk tolerance as well as perceptions. Acts of terrorism reduce confidence in foreign investors and can result in cash outflows in the affected countries. Once a country is considered a target for terrorism, the level of foreign investment is likely to reduce.
Global terrorism has a direct impact on international trade. When such attacks occur, both the quantity and quality of goods and services is reduced, the livelihood is affected. Governments should develop measures to counter global terrorism if we have to move forward.