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Globalization and Terrorism

A case study

Terrorism is "the systematic use of terror especially as a means of coercion." There is no internationally agreed legal definition. In one modern definition of terrorism, it is violence against civilians to achieve political or ideological objectives by creating fear. Most common definitions of terrorism include only those acts which are intended to create fear (terror), are perpetrated for an ideological goal (as opposed to a lone attack), and deliberately target or disregard the safety of non-combatants. Some definitions also include acts of unlawful violence and war.

Terrorism and the fear of terrorism did not reverse the trend toward globalization in the world economy, however. It only slowed it down by making all sorts of transactions more costly and time consuming. It is clear that the cost of all sorts of international transactions(from tourism, international trade, and international financial transactions) has increased in order to pay to added security, and insurance costs have skyrocketed. Some people have certainly been discouraged from traveling abroad out of fear and because of the increased costs and some firms have reduced their trade and investment activities abroad. Furthermore, some investments that before September 11 flowed in to directly productive activities diverted and spent on security. the effect of this is like the imposition of a tariff of, say, 10 to 20 percent, or other obstraction to the flow of international trade and investments, which is slow down the process of globalization but does not reverse it. Economic efficiency requires globalization, and technological advances make it inevitable. There is simply no alternative model .


To be able to understand and address the root causes of terrorism

To know the remedy/solutions on how to minimize terrorism

Cause of Terrorism

- Social and Political Injustice - The belief that violence or its threat will be effective, and usher in change.

Different courses of actions / alternative options

Defense Spending Gun Industry Alliances Air Travel Insurance

Defense Spending

In reaction to terrorist activities, governments often call for increases in defense spending. This often translates into tax hikes for the average citizen as governmental spending increases. While this may ease the minds of citizens and actually provide a higher level of security for a nation, the fact remains that every dollar that is given to the government is taken out of the cash flow of a nations natural market economy


It can be argued that a war can be good for an economy since a war creates a new demand for supplies such as ammunition, planes, and other military supplies. This can create new jobs as the market responds to increased demands

New Offices
Another response to terrorism is the creation of new branches of government in order to keep a closer eye on terrorist activities and secure the individual country from attack.

Gun Industry

This can result in a large increase in gun sales following a well-publicized terrorist attack.

The increase in the number of new gun owners means that there will be an influx of people who want to learn how to effectively use a gun. This translates into shooting clubs, shooting instructors, and safety instructors being supplied with a larger clientele base.

Government Response
The government of a country will usually respond to terrorist activity be re-evaluating their current gun control statutes in order to prevent guns from being sold to terrorists.


Terrorism will generally result in a retaliatory response by the nation that is attacked. This response may or may not be seen by other nations as proper and may or may not be supported. Such an alliance signifies good will and can even help to perpetuate a positive relationship when such a retaliatory campaign finally comes to a close. Economic Effects The economic effect of a strong alliance assures that there will be future strengthening and cohesion between the economies, often growth in trade, among other things. The result is often a strengthening of both of the nations respective economies. In essence, a traumatic event such as a terrorist attack can bring two or more nations together to fight side by side with a common goal in mind. This military alliance often lays the ground work for an economical alliance which can be beneficial to all parties involved. Such an alliance is often seen between the United States and Britain as the two nations typically share both an economical and a military alliance in todays modern era.

Air Travel

Economic Effects The moment at which terrorists succeed at using airplanes to inspire fear in air travellers they have accomplished their aim. Since 9/11, the airline industry has been wracked with increasing economic problems, from security to increased ticket prices, to a drop in air travellers, along with a host of other fall-out factors. And, now, the increasing cost of oil is forcing once solid industry giants to lose their financial footing.


Airlines have had to invest in expensive baggage and passenger scanning equipment, as well as hire many extra security personnel to help regain the publics trust that air travel is safe. While such responses are necessary to secure the safety of passengers and ensure that further attacks are prevented, the resulting economic losses are large.


The basic concept of insurance is simple; pay a premium in exchange for the comfort of knowing that should a disaster occur, an insurance company will foot the bill. Therefore, it is only natural that insurance agencies evolve to offer higher levels of insurance against terrorist attacks in a world that has become increasingly aware of terrorisms devastating effects.


Many people in the private sector of insurance feel that since it is the governments duty to provide security to the public against terror attacks, the government should also help in the rebuilding process should an attack occur.


Large companies, especially airlines, have seen insurance prices skyrocket due to the costs associated with insuring against terrorist attacks. Prior to 9/11, businesses were paying premiums that were substantially lower. For example, Chicagos OHare airport was paying a monthly premium of around $125,000 before the events of 9/11 in order to receive $750 million worth of coverage. After 9/11, the premium rose to an estimated $6.9 million for a coverage of only $150 million. This is how terrorism affects the economical structure of the insurance industry. As the threat of attack rises, so do premiums, while the amount of coverage that is provided falls. This translates into business paying more and getting less.


Global Justice and Equity Non Violence Co-Operation

Terrorism exists not only because of the unmet basic needs, but as well as due to political instability which leads to crisis globally. People who choose terrorist tactics are also persuaded that violence, or the threat of violence, is effective. As long as economic and political aspects are unstable, we cannot eradicate terrorism, only minimize it.

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