Book review: “Terrorism and the economy impacts on the capital market and the global tourism industry” By Karin Glaser, 2015
In this anthology, Karin Glaser carries out a systemic analysis of the national, regional and global impacts of terrorism on both capital and tourism markets based on a varied selection of terrorist attacks dated in the 1970’s and later.
ECONOMIC IMPACTS CORRELATED TO TERRORISM STRATEGY
Four axes of terrorism strategy are to be scrutinized to foresee related economic impacts: (1) The larger the scale of a terrorist attack, as well as the greater the media attention, the stronger the overall negative impacts; (2) The higher the number of casualties, although the target may vary, whether armed forces, civilians, foreigners or travelers, the faster the governments weakening and the wider the media coverage; (3) The longer-lasting a terrorist activity, the greater the economic instability and political unrest; (4) The weaker a country, whether due to terrorism or war, the more difficult the recovery. Skillfully manipulating all above four aspects of terrorism, the Islamic State maximizes its recognition.
PREDISPOSING CONDITIONS TO RECOVERY
The more diversified and developed a country, the faster and sounder the recovery for its financial and touristic activities. Sustainable response is then for developed countries to provide skills transfer to developing countries. Such sharing would be more valuable than financial support as reinforcing security and prevention in the short term, as well as autonomy on such crises in the medium to long-term.
ECONOMIC SPILLOVER EFFECTS
Terrorism and war often weaken economies and industries. If a specific industry is targeted, negative impacts in the short run may appear, and propagate as the crisis lasts. From an industry perspecive, the unrest may fast reach national, regional and international economic and financial spheres: (1) the collapse of a country stock market negatively affects economically weaker, less diversified and/or dependent trading partners to the extent of putting them in turn at risk economically. Democratic countries tend to face higher spillover effects from their attacked trading partners; (2) Investors may withdraw, postpone or even shift their investments to alternative countries. Tourism and tourism-related industries are particularly exposed, where violence consequences vary from a time-limited hold in reservations to a permanent shift in destinations. Safety and security should be underlined in the organisational strategies of tourism and tourism-related industries, all the more as tourism represents a key resource for many developing countries.
STAKE OF THE GOVERNMENT AND INDUSTRY ACTIONS
Both governments and industries should then be pro-active in counter-terrorism, individually and as a group. Besides these international counter-terrorism devices, governments should propose financial measures to stimulate demand and encourage economic diversification. Such political and economic (re)structuring should reassure foreign investors and travellers, as well as support a fast recovery in case of violence. To do so, governments should implement effective policies surrounding terrorism and weakening its impacts.