NAME FAWAD ALI

ROLL NO. BE-612

SEMESTER 6TH

BS -ECONOMICS MORNING

DATE 22/11/2024

A CASE STUDY ON ECONOMIC IMPACT OF 9/11 ATTACK ON USA AND GLOBALLY:

Introduction:

Terrorism events mainly refer to violent acts to install fear, targeting government and property, causing
the loss of precious life, economics damages, psychological trauma and political instability. Due to
terrorism event there are different impacts occur to the society and government like social, political,
psychological, economical and global. The social impact of terrorism events is the loss of trust among
different communities and groups. People from different group and religion are against one another.
People may avoid public places, gathering and travel due to fear of terrorism impacting the social
behavior. The psychological impacts are the trauma caused by terrorism event among these people
living near the places where terrorism event occurs causing stress disorder, depression and long-term
distress. The global impacts are the destabilization among region, causing alteration among different
countries, which can lead to the military intervention and create alliances for counterterrorism. The
main impact was the economical which is main topic, which is the direct cost, damage to infrastructure
and emergency response cost, leading to losses of Business, tourism decline, stock market effected, loss
of jobs. It also led to long term economic decline like reduction of foreign investments and slowed
economic growth.

Research objectives:

 To quantify the extent of damages caused by mega terrorism event of 9/11 attacks on USA
such as the economics loss, including the property damages, stock prices impacts and business
disruptions.
 To Examine the Long-Term Socio-Economic Impacts of 9/11 such the impact on global and US
economics policies including the increased security spending.
 To analyze the impacts on business like industries, aviation, tourism and global trade.

Research question:

 What is the economic impact of 9/11 terrorism event on US, including the damages caused by
this mega terrorism events?
 To analyze the short- term and long-term effect of terrorism event on the affected countries?
 To see the global impact of 9/11 terrorism event on different countries including Pakistan?

Literature review:

Oklahoma City Bombing (1995):

The Oklahoma City bombing is terrorism event occurred in April 19, 1995 by ex-army solider and
security guard named timothy McVeigh parked a rented truck in front of the Alfred p. murrah
federal building in downtown city Oklahoma and place 2200 kg of bomb near in the north side of the
ninth story Alfred P. Murrah Federal building. This terrorism events lead to the loss of 168 people
and more than hundred was injured. One-third of this building was completely destroyed by this
blast. This blast is so powerful that shattered 258 glasses and the shattered glasses was accounted
for 5% of the total death. The explosion was estimated to have caused at least $652 million worth of
damages. This is the one of the main terrorism events in the history of US.
The Munich Olympics (1972):

The Munich Olympics attack was a devastating act of terrorism that occurred during the 1972
Summer Olympics in Munich, West Germany. This event not only resulted in a tragic loss of life but
also left an indelible mark on the world of international sports and global security. The Munich
Olympic attacks had a significant economic impact on Germany and the global sporting community.
Tourism, which had been anticipated to grow due to the global attention on the games, experienced
a notable decline in the months following the attack, as travelers perceived Germany as unsafe. The
Olympic Games themselves faced significant financial setbacks, with costs related to heightened
security measures and disrupted schedules. Globally, the attack forced nations to reevaluate their
spending on event security. The incident led to skyrocketing costs for securing international sporting
events, setting a precedent for the deployment of advanced surveillance, personnel, and protective
infrastructure at the expense of event budgets. Furthermore, Israel bore economic costs as the
attack spurred its government to intensify counterterrorism operations globally, reallocating
resources from other critical areas.

The Mumbai attacks (2011):

The Mumbai attacks, often referred to as 26/11, had severe economic repercussions for India,
particularly for Mumbai, the financial capital of the country. The attacks targeted luxury hotels, a
railway station, and other significant sites, impacting tourism, trade, and investor confidence. The
Mumbai attacks had a profound economic impact on India, particularly its financial hub, Mumbai. As
a city central to India’s commerce, finance, and tourism, the four-day siege disrupted business
activities and left lasting scars on its economy. The attacks directly targeted prominent luxury hotels
such as the Taj Mahal Palace and the Oberoi Trident, causing severe damage to infrastructure and
reputation. The hospitality and tourism sectors were hit hard, with significant drops in occupancy
rates and international tourist arrivals in the months following the incident. Many countries issued
travel advisories, further exacerbating the economic fallout for an industry that forms a substantial
part of Mumbai's economy.

The Madrid train bombings (2004):

The Madrid train bombings, occurred on March 11, 2004, and were one of the deadliest terrorist
attacks in Europe. A series of coordinated bomb blasts targeted commuter trains during rush hour,
killing 193 people and injuring more than 2,000. The attacks shocked Spain and the world, leaving
lasting political, economic, and social impacts. One of the most immediate economic impacts was
the disruption to Madrid's transportation infrastructure. The bombings directly targeted the city’s
commuter train network, causing widespread delays, cancellations, and infrastructure damage. In
addition to repair costs, businesses faced losses due to employees being unable to commute,
resulting in reduced productivity. This disruption in the transport sector also highlighted the
vulnerability of critical urban infrastructure to acts of terrorism, prompting increased investment in
security measures, which added to public spending.
MAIN RESEARCH:

Every terrorism event lead to loss of precious life, damaging infrastructure, economically damages and
having some global impact. Which can be in form of military invasion, creating alliances and destabilizing
the neighboring countries.

The mega Terrorism events happened in the history of the USA was on the world trade center, also
known as 9/11 attack. On September 11, 2001, there was a suicide terrorist attack in the Twin towers.
The Islamic extremist group Al-Qaeda hijacked four airliners and attacked in the towers. There were 19
terrorists in that group. Among the four planes, two planes were flown into the World Trade Center in
New York City, a third plane hit the Pentagon outside Washington D.C and the fourth one crashed in a
field in Pennsylvania. The 9/11 attacks resulted in extensive death and destruction, including the loss of
more than 3000 people in both New York and Washing DC, including more than 400 fire fighter and
police officer.

Such terrorism event and incidents have economic consequences by diverting foreign investment (FDI),
destroying the infrastructure, reducing the public investment, destabilize economy and security. USA
was developed country in 2000 with high FDI. But this event badly affects USA Diverting the FDI and
experienced slow economics growth. After the 2001 terrorist attacks in America, the country spent
around $3.3 trillion on various areas, including war efforts, preparing for future conflicts, and
strengthening homeland security. The attacks caused $55 billion in physical damages and an additional
$123 billion in economic losses.

This is much more loss in the history of United State of America. ON the other hand, USA made a strict
policy to detained the culprits which Is named “war on terror” carried by president George W. bush. The
US increased the military, economic measures, and political pressure on groups that it accused of being
terrorists, as well as increasing pressure on the governments and countries which were accused of
sheltering them. This war extended to many countries like Afghanistan where NATO invaded in oct
2001, to remove the Taliban government and capture al-Qaida. Where Afghanistan face much loss due
to military invasion of US. Such as loss of precious life, infrastructure and homeless people. Pakistan also
face the consequences of the war due to neighborhood country of Afghanistan in the form of military
operation in the area of Waziristan, Tirah valley and the border area touching with Afghanistan. Leading
to displacing of many people. Iran also face the military operation due to al Qaida causing human loss
destroying property and infrastructure.

So, 9/11 incident have consequences on US but the rest of the world have faced many things due to this
event. Such as the stock exchange damaged badly, leading to the economic crisis of the rest of world,
Military invasion in different countries and destabilizing the other countries.
Total cost of 9/11:

Toll and physical damage $55 billion

Economic impact $123 billion

Homeland security and other costs $589 billion

War funding and related costs $1,649 billion

Future war and veterans' care costs $867 billion

Tourism industry affected $2 billion

Domestics airline cost $100 million

After the 9/11 terrorist attacks, the US tourism industry lost around $2 billion in just the two weeks
following the event. Employment dropped by 5%, and domestic airlines lost $100 million. Due to these
losses in tourism, the country's GDP suffered a decline of $27.27 billion. The labor market was hit hard,
with more than 335,000 people losing their jobs between 2001 and 2002. Of those, 141,000 were from
the accommodation sector, and 93,000 were from air travel. The most affected sectors were air
transportation and hotels, with air travel losses reaching $5 billion and hotel sector losses totaling $5.9
billion. Overall, the tourism industry saw a 34% decline in business during September and October of
2001. The US face much more loss in business like hotel, restaurant and travel. In 2001 the US air travel
industry lost 5 billion US dollars. The US hotel According to the leisure lodging industries’ report it lost
20 billion US dollars in 2001. 9/11 incidents were the main reason at that time which directly affected in
the restaurant industries. In America more than 75% of the restaurant is depends upon the domestic
tourism and the incident brought a crisis in the restaurant industries.

CONCLUSION:

Terrorism events like 9/11 attack have a significant influence on global economy. In the history of the
world there is no other single terrorist act such as the 9/11 attacks, which had such a negative impact on
the economy of the world. The world is suffering from the emotional condition of a billion people. This
event badly affects the US and the rest of the world.

What we learn from 9/11 attack? We learn that War between two lead to loss of thousand. We learn
the impact might be look small but the consequences may be bigger. We learn that in short term there
is benefit for one party but in long term the consequences will hit him in future. Event like that badly
affect the peace of world. It might be peace to one but stress to many. Such event badly affects the
infrastructure, economy and causing stress among people, children and environment.

Such incidents have also badly impact on the rest of the world. They might be very far but they can also
face the consequences. Such event has a short-term benefit for one but in long term it always led to
loss.

REFERENCE:

 Coughlin, Con (2009), U.S. government report on the September 11, 2001, terrorist
attacks
 Bysyuk, V. (2007) Impact of 9/11 Terrorist Attacks on US
 Metin Aksoy, (2014), The Impacts of the 9/11 Attack on USA Foreign Policy Leaded by
George W. Bush
 https://en.wikipedia.org/wiki/Aftermath_of_the_September_11_attacks
 M Kubickova, (2019) The impact of crises on hotel rooms' demand in developing
economies: The case of terrorist attacks of 9/11.
 JE Moore – 2007 The economic impacts of terrorist attacks