Terrorism is the systematic use of terror especially as a means of coercion. At present, there is no internationally agreed definition of terrorism. Common definitions of terrorism refer only to those violent 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.
Terrorism has occurred throughout history, but today the world is experiencing a global rebirth of attacks. Today it no longer affects only small societies, such as isolated third world countries who fell victim to regular terrorist attacks. The terrorist violence that is on the rise today has informed citizen all over the world about different types of terrorism. Also with the resurgence the world is experiencing of terrorism, the Nation's have been to do what they can to eliminate terrorism. Mainly terrorism has social, psychological and especially economic effects on societies. And we’ll have an eye on the effects of terrorism on international markets, businesses and commerce activities.
Extant research on the effect of trans-national terrorist attacks on international commerce has found evidence within a gravity model framework that terrorism reduces bilateral trade flows. The terrorism creates the overall risk environment for businesses in a country. Furthermore, many terrorist attacks actually involve an attacker from a particular country and a target in another country. The effect of terrorism on trade between countries is directly the effect of a terrorist incident involving an attacker from one country against a target in another, like the recent Mumbai attacks have highly affected the Indo-Pak economic activities. The idea is that such bilateral terrorist attacks more closely reflect the affinity and quality of the relationship between the citizens of the two relevant countries and hence, better represent the actual risk posed to traders in the two countries.
The possibility of an international terrorist activity has suggested to policy makers the need to consider the possibility of border closures to interrupt trade, international business travel, tourism and the loss of immigrant labor. In an era of significant globalization, the costs of such measures are substantial. On the other hand, the duration of a worst-case outbreak could be as long as many years and hundreds of thousands could die. The results must be assessed carefully in light of the uncertainties involved and the fact that this could be an extreme event outside the normal range of the data used to estimate the model. Nevertheless, the estimated costs of border closure and the benefits (the dollar value of lives saved and health expenses minimized) are sufficiently close that closing the border merits serious attention as a mitigation strategy if a pandemic breaks out.
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