Advertisement

An Exploration into How Terrorism Impacts Business Environment in MENA Region

  • Hamid PadashEmail author
  • Bahman Khodapanah
Chapter
Part of the Contributions to Management Science book series (MANAGEMENT SC.)

Abstract

The relationship between security and business has been an important issue for social theorists and policymakers. In recent decades, terrorism, especially at international level, has emerged as an important threat to the business. It reflects the risk of violent acts to attain political goals via fear, coercion or intimidation. According to literature, global trade and foreign investments require to strengthen and maintain the economic security. In some countries, terrorism can increase political risks and lead to isolation of these countries from the rest of the world. There are limited studies that show how the business reacts on terrorism. Few economists have examined the economic forces of the terrorism formation and its impact on business performance and environment. Hence, present study with its descriptive nature, tries to explore economic origins of terrorism and its relationship with business environment in MENA countries. We have classified our research into three areas including terrorism impact on foreign direct investment, tourism industry and doing business (four sub-indices of World Bank project of doing business including starting a business, getting electricity, paying taxes and trading across borders) in MENA countries. Our results suggest that regional terrorism in the recent decade has had significant negative impact on indicators such as foreign investment, tourism and doing easily business in MENA countries.

Keywords

Terrorism Business environment FDI Tourism Doing business MENA 

References

  1. Abadie A, Gandeazabal J (2008) The economic costs of conflicts: a case study of the basque country. Am Econ Rev 93:113–132CrossRefGoogle Scholar
  2. Abadie A, Gardeazabal J (2008) Terrorism and the world economy. Eur Econ Rev 52(1):1–27CrossRefGoogle Scholar
  3. Al-Hamarneh A, Steiner C (2004) Islamic tourism: rethinking the strategies of tourism development in the Arab World after September 11, 2001. Comp Stud South Asia, Africa and the Middle East 24(1):173–182CrossRefGoogle Scholar
  4. Aly Y, Strazicich M (2000) Terrorism and tourism: is the impact permanent or transitory? Time series evidence from Egypt and Israel. Working paper No. 2010, College of Business and Administration, University of Central Florida, USAGoogle Scholar
  5. Aon (2015) Terrorism & political violence risk map. Risk AdvisoryGoogle Scholar
  6. Arana J, Leon C (2008) The impact of terrorism on tourism demand. Ann Tour Res 35(2):299–315CrossRefGoogle Scholar
  7. Arin K, Ciferri D, Spagnolo N (2008) The price of terror: the effects of terrorism on stock market returns and volatility. Econ Lett 101(3):164–167CrossRefGoogle Scholar
  8. Baker D (2014) The effects of terrorism on the travel and tourism industry. Int J Relig Tour Pilgr 2(1):58–67Google Scholar
  9. Bandura A (1990) Mechanisms of moral disengagement. In: Reich W (ed) Origins of terrorism: psychologies, ideologies, theologies, states of mind. Cambridge University Press, Cambridge, pp 161–191Google Scholar
  10. Bandyopadhyay S, Sandler T, Younas J (2011) Foreign direct investment, aid, and terrorism: an analysis of developing countries. Federal Reserve Bank of St. Louis Working paper No.Google Scholar
  11. Best S, Nocella A, Anthony J (2004) Defining terrorism. Anim Lib Philos Policy J 2(1):1–18Google Scholar
  12. Busse M, Hefeker C (2007) Political risk, institutions and foreign direct investment. Eur J Polit Econ 23(2):397–415CrossRefGoogle Scholar
  13. Chenoweth E (2013) Terrorism and democracy. Annu Rev Polit Sci 16:355–378CrossRefGoogle Scholar
  14. Czinkota M, Knight GA, Liesch PW (2004) Terrorism and international business: conceptual foundations. In: Terrorism and the international business environment: the security-business nexus. Edward Edgar, Cheltenham, pp 43–57Google Scholar
  15. Czinkota, M. (2005). International marketing and terrorism preparedness. Paper presented before the congress of the United State, House of Representatives, 109TH Congress, Committee on small business, Washington, DCGoogle Scholar
  16. Drakos K, Kutan AM (2003) Regional effects of terrorism on tourism in three Mediterranean countries. J Confl Resolut 47(5):621–641CrossRefGoogle Scholar
  17. Edobor FO (2014) The impact of terrorism and violence on entrepreneurs in Nigeria. Res Papers Knowl Inno Enterp 10:132–147Google Scholar
  18. Enders W, Sandler T (1991) Causality between transnational terrorism and tourism: the case of Spain. Stud Confl Terror 14(1):49–58Google Scholar
  19. Enders W, Sandler T (1996) Terrorism and foreign direct investment in Spain and Greece. Kyklos 49(3):331–352CrossRefGoogle Scholar
  20. Enders W, Sandler T (2006) Distribution of transnational terrorism among countries by income class and geography after 9/11. Int Stud Q 50(2):367–393CrossRefGoogle Scholar
  21. Enders W, Sandler T, Parise G (1992) An econometric analysis of the impact of terrorism on tourism. Kyklos 45(4):531–554CrossRefGoogle Scholar
  22. Enders W, Sachsida A, Sandler T (2006) The impact of transnational terrorism on US foreign direct investment. Polit Res Q 59(4):517–531CrossRefGoogle Scholar
  23. Evrensel A, Kutan A (2007) Are multinationals afraid of social violence in emerging markets?: evidence from the Indonesian provinces. J Econ Stud 34Google Scholar
  24. Fielding D (2003) Modelling political instability and economic performance: Israeli investment during the Intifada. Economica 70(277):159–186CrossRefGoogle Scholar
  25. Fleischer A, Buccola S (2002) War, terror, and the tourism market in Israel. Appl Econ 34(11):1335–1343CrossRefGoogle Scholar
  26. Fleischer A, Pizam A (2002) Tourism constraints among Israeli seniors. Ann Tour Res 29(1):106–123CrossRefGoogle Scholar
  27. Gaibulloev K, Sandler T (2008) Growth consequences of terrorism in Western Europe. Kyklos 61(3):411–424CrossRefGoogle Scholar
  28. Gupta S, Clements B, Bhattacharya R, chakravarti S (2004) Fiscal consequences of armed conflict and terrorism in low-and middle-income countries. Eur J Polit Econ 20(2):403–421CrossRefGoogle Scholar
  29. Institute for Economics & Peace (2015) Global terrorism index report (PDF). November 2015, pp 90–92. Retrieved 21 May 2016Google Scholar
  30. Institute for Economics and Peace (2016) Global terrorism index. Institute for Economics and Peace, New YorkGoogle Scholar
  31. Israeli A, Reichel A (2003) Hospitality crisis management practices: the Israeli case. Int J Hosp Manag 22:353–372CrossRefGoogle Scholar
  32. Kalesar M (2010) Developing Arab-Islamic tourism in the Middle East: an economic benefit or a cultural seclusion? Int Polit 3(V):105–136Google Scholar
  33. Keefer P, Loayza N (2008) Terrorism, economic development, and political openness. Cambridge University Press, CambridgeCrossRefGoogle Scholar
  34. Kinyanjui S (2014) The impact of terrorism on foreign direct investment in Kenya. Int J Bus Adm 5(3):148–157Google Scholar
  35. Knight G, Czinkota M (2008) Terrorism and international business. Working paperGoogle Scholar
  36. Krakover S (2005) Estimating the effect of atrocious events on the flow of tourists to Israel. In: Horror and human tragedy revisited: the management of sites of atrocities for tourism. Cognizant Communication Corporation, New York, pp 183–194Google Scholar
  37. Krueger A, Maleckova J (2003) Education, poverty and terrorism: is there a causal connection? J Econ Perspect 17(4):119–144CrossRefGoogle Scholar
  38. Li Q (2006) Political violence and foreign direct investment. Res Glob Strat Manag 12:231–255Google Scholar
  39. Llorca-Vivero R (2008) Terrorism and international tourism: new evidence. Def Peace Econ 19(2):169–188CrossRefGoogle Scholar
  40. Moruff Sanjo O, Adeniyi Marcus O (2014) Effects of terrorism on the international business in Nigeria. Int J Humanit Soc Sci 4(7(1)):247–254Google Scholar
  41. Nedelescu O, Johnston M (2005) The impact of terrorism on financial markets (No. 5-60). International Monetary FundGoogle Scholar
  42. Neto D, Vilela F, Harb J (2010) Impacts of wars and terrorism on tourism in Lebanon. Bachelor thesis. Modouol Vienna University, ViennaGoogle Scholar
  43. Nitsch V, Schumacher D (2004) Terrorism and international trade: an empirical investigation. Eur J Polit Econ 20(2):423–433CrossRefGoogle Scholar
  44. Omay T, Araz-Takay B, Eruygur A, Kilic İ (2013) The effects of terrorist activities on foreign direct investment: nonlinear evidence from Turkey. Rev Econ 64(2):139–158CrossRefGoogle Scholar
  45. Ozer AC (2015) Terrorism in the world. J Socialomics 5(1)Google Scholar
  46. Paraskevas A, Arendell B (2007) A strategic framework for terrorism prevention and mitigation in tourism destinations. Tour Manag 28(6):1560–1573CrossRefGoogle Scholar
  47. Pizam A (2016) A comprehensive approach to classifying acts of crime and violence at tourism destinations. J Travel Res 38(1):5–12CrossRefGoogle Scholar
  48. Pizam A, Smith G (2000) Tourism and terrorism: a quantitative analysis of major terrorist acts and their impact on tourism destinations. Tour Econ 6(2):123–138CrossRefGoogle Scholar
  49. Porter MD, White G, Mazerolle L (2012) Innovative methods for terrorism and counterterrorism data. In: Evidence-based counterterrorism policy. Springer, New York, pp 91–112CrossRefGoogle Scholar
  50. Rasheed H, Tahir M (2012) FDI and terrorism: co-integration and granger causality. Int Aff Glob Strateg 4:1–5Google Scholar
  51. Rose A, Oladosu G, Liao S (2007) Business interruption impacts of a terrorist attack on the electric power system of Los Angeles: customer resilience to a total blackout. Risk Anal 27(3):513–531CrossRefGoogle Scholar
  52. Sageman M (2014) The stagnation in terrorism research. Terror Polit Violence 26(4):565–580CrossRefGoogle Scholar
  53. Sandler T, Enders W (2004) An economic perspective on transnational terrorism. Eur J Polit Econ 20(2):301–316CrossRefGoogle Scholar
  54. Sandler T, Enders W (2008) Economic consequences of terrorism in developed and developing countries: an overview. In: Keefer P, Loayza N (eds) Terrorism. Economic Development and Political Openness, Cambridge University Press, New YorkGoogle Scholar
  55. Seddighi H, Nuttall M, Theocharous A (2001) Does cultural background of tourists influence the destination choice? An empirical study with special reference to political instability. Tour Manag 22(2):181–191CrossRefGoogle Scholar
  56. Shivani A (2011) The impact of terrorism on foreign direct investment: which sectors are more vulnerable? CMC Senior Theses. Claremont CollegesGoogle Scholar
  57. Sonmez S, Tarlow P (1999) Tourism in crisis: managing the effects of terrorism. J Travel Res 38:13–18CrossRefGoogle Scholar
  58. Suder G (2004) Terrorism and the international business environment: the security-business nexus. Edward Elgar, CheltenhamCrossRefGoogle Scholar
  59. Tarlow P (2005) Terrorism and tourism. eRTR 3(5):18–21Google Scholar
  60. Tversky A, Kahneman D (1974) Judgment under uncertainty: heuristics and biases. Science 185:1124–1131.  https://doi.org/10.1126/science.1854157.1124 CrossRefGoogle Scholar
  61. Ugorji B (2017) Combating terrorism: a literature review. International Center for Ethno-Religious MediationGoogle Scholar
  62. United Nations (2006) United Nations global counter-terrorism strategy. United Nations, New York. Retrieved from https://www.un.org/counterterrorism/ctitf/en/un-global-counterterrorism
  63. Wahab S (1996) Tourism and terrorism: synthesis of the problem with emphasis on Egypt. In: Tourism, crime and international security issues. Wiley, New York, pp 175–186Google Scholar
  64. Walkenhorst P, Dihel N (2002) Trade impacts of the terrorist attacks of 11 September 2001: a quantitative assessment. In workshop on the economic consequences of global terrorism, BerlinGoogle Scholar
  65. White G, Porter MD, Mazerolle L (2013) Terrorism risk, resilience and volatility: a comparison of terrorism patterns in three Southeast Asian countries. J Quant Criminol 29(2):295–320CrossRefGoogle Scholar
  66. World Bank (2015) Foreign direct investment, net inflow. https://data.worldbank.org/indicator/BX.KLT.DINV.CD.WD
  67. WTO (2013) UNWTO annual report 2013. World Tourism Organization. http://www2.unwto.org/publication/unwto-annual-report-2013

Copyright information

© Springer International Publishing AG, part of Springer Nature 2018

Authors and Affiliations

  1. 1.Faculty of EntrepreneurshipUniversity of TehranTehranIran
  2. 2.University of TehranTehranIran

Personalised recommendations