MEASURING AND UNDERSTANDING THE IMPACT OF TERRORISM

KEY FINDINGS
The global economic costs of
terrorism reached the highest ever
level in 2014 at US$52.9 billion, up
from $32.9 billion in 2013.
However, compared to other forms of
violence, the losses from terrorism
are relatively small. For instance,
costs associated with violent crime
and homicide are 32 times higher
than losses from terrorism.
IEP has aggregated global national
security expenditures, finding that the
world spends approximately US$117
billion on national security agencies
which are tasked with preventing
terrorist activity.
The countries most affected by
terrorism have had their economic
growth and foreign direct investment
negatively affected. In other countries
the economic effect is minor.
The costs of a particular terrorist attack, particularly large scale events, can be
significant. However, most terrorist attacks are relatively small and other forms
of violence lead to a much greater human and economic cost.
The methodology used to calculate the economic costs of
terrorism is conservative. It mainly involves counting the lost
wages of the injured and deceased and the immediate flow on
effects on family and friends. The study does not estimate
additional costs such as the increased level of security guards or
higher insurance premiums, or broader economic impacts such
as city gridlock after an attack. When comparing terrorism costs
to other forms of violence, such as homicides, similar costing
approaches have been adopted for comparability.
For most countries, terrorism does not have a meaningful
impact on economic growth and foreign direct investment
(FDI). However, for very large terrorist events or countries with
very high levels of terrorism, there can be very notable economic
impacts. This is especially true for the ten countries most
affected by terrorism.
For instance, very large attacks like September 11 can have a
significant economic impact. The loss of life and destruction of
infrastructure from September 11 is estimated to be US$14
billion in New York alone. Very significant levels of terrorism
can also cause large decreases in output. In Nigeria, FDI
decreased by 30 per cent due to increased levels of terrorism in
2010. Further, terrorist events in Israel in 2001 were said to
have decreased GDP by one per cent. 17
As can be seen in figure 34, in 2014, IEP estimates the direct
global costs of terrorism amounted to US$52.9 billion. This is
a 61 per cent increase from the previous year’s total of $32.9
billion, and over a tenfold increase since 2000. The vast
majority of the costs stem from injury and death.
Since 2000, there has been a growing trend towards minor
bombings and explosions and a decrease in major property
attacks, defined as those causing over $1 million of damage. 18
Figure 35 on page 65 highlights that the losses from terrorism in
2014 are $52.9 billion compared to $1.7 trillion for the losses from
violent crime and homicide. This equates to a 32 times difference.
GLOBAL TERRORISM INDEX 2015 | Economic Costs of Terrorism
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