A study on the costs of terrorism has been circulated at the Secure Trade in the APEC Region (STAR) Conference in Bangkok.
'The Costs of Terrorism and the Benefits of Cooperating to Combat Terrorism' highlights the serious economic consequences of not acting to prevent terrorism. The study also provides examples of cost estimates of specific terrorist attacks.
The study, prepared by the Australian Department of Foreign Affairs and Trade, drew on historical evidence and economic figures that have emerged in recent years of heightened terrorist concerns.
Keep points of the report include:
Evaluating previous patterns, the study drew on evidence of over 200 countries from 1968 to 1979 in which there was a doubling of the number of terrorist incidents. This resulted in a decrease in bilateral trade between the economies targeted by terrorism of around 6 per cent.
Following the Bali bombing Indonesia tourist arrivals fell 2.2 per cent in 2002, and resulted in a loss of about 1 per cent of Indonesia's GDP.
Heightened terrorism in Spain and Greece reduced average annual net FDI inflows by more than 10 per cent between 1975 and 1991.
The loss of US output resulting from terrorism related costs could be as high as 0.75 per cent of GDP or US$75 billion per year. This cost plays off directly against the hard won gains of trade liberalization which in the United States is more than the 0.4 to 0.6 per cent annual increase in GDP from the Uruguay Round.
The costs of terrorism are likely to be felt more by developing economies because of their relatively greater dependence on foreign trade and foreign direct investment inflows. At the same time, cargo and vessels traveling to and from developing economies could also be subject to higher insurance premiums.
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