Economic impact of security threats

Economic impact of security threats

After a big terrorist event, one can read frequently about the economic damage of the event on the local economy such as after the London Bombings in 2005 or the September 11 attacks in New York. Another hot topic in the UK is a new police website where users can view the number of crimes at street level. According to property specialists, this site could have a negative impact on house prices, which demonstrates a relationship between real estate value and crime rates. Put differently, the economic impact of security threats (crime & terrorism) can be significant and explains why economists and related scholars increasingly analyzed the economic impact of (see clickable map):

Groups of economic impact of security threats

According to Krugman (2004), the economic impact of terrorism is similar to the economic impact of crime, and can be divided into three groups:

1. The direct economic impact performed by criminal and terrorist acts on the urban object/environment (buildings and infrastructure destroyed, productive lives ended).
2. The indirect economic impact (on the urban environment) such as effects on tourism, investments, consumption, trade, etc.).
3. Budget effects of preventive security measures against crime and terrorism such as money spent on national defense, airport security, and the police, in an attempt to prevent or forestall future criminal and terrorist events.

Related subjects

The economic impact of security threats are closely related to:

• The economic effects of security measures
• The economics of terrorist and criminal behaviour

For other related subjects, see the clickable map below:

MAP

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