There are two obvious industries especially vulnerable to the effects of terrorism: insurance and tourism.
Not all insurance companies pay out in the event of international terrorism or foreign wars, so the impact is likely less than you might first expect.
The financial markets literally shut down after Sept.
11 and did not really recover until months after the 2003 invasion of Iraq.
This also means less foreign direct investment (FDI), especially in unstable countries.
The estimated direct economic cost of the 9/11 terrorist attacks.
While the human cost is devastating, the economic impact may be larger than most realize.
The following are five ways that terrorism has an impact on the economy.
Productive resources that might have generated valuable goods and services are destroyed, while other resources are almost invariably diverted from other productive uses to bolster the military and defense.
None of this creates wealth or adds to the standard of living, even though military spending is often erroneously cited as a stimulant; this is the "broken window fallacy" sometimes mentioned by economists.