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How Does Terrorism Affect the Economy of the Middle East?


According to the United States Department of State, terrorism is defined as a premeditated and politically motivated form of violence that is usually perpetrated against sub-national or non-combatant groups with the intention of influencing certain groups of people (Council on Foreign Relations). In the Middle East, terrorism can be compared to a parasite that feeds on the fear of people and, as a result, inflicts several social, economic and political problems. Many countries in the Middle East are Islamic states and international producers of oils; this factor has played an important role in promoting terrorism. Other causes of terrorism include the increased poverty levels, injustices, unemployment, and lack of access to the proper education. This essay will, therefore, discuss some of the economic impacts of terrorism in the Middle East and how it has damaged the general economy of the countries.

Effects of Terrorism on the Economy of the Middle East

Some of the major terror groups in the Middle East include the Al Qaida and ISIS. For a very long time, these terror groups have brought the economies of some countries to their knees because of the decreased levels of investment in such countries. Investors, for instance, in the oil industries are usually discouraged by terror because it increases the cost of running businesses (“The Economist”). This is explained by the fact that more money has to be allocated to cater for security. Additionally, investors tend to be discouraged by terror because it often leads to the destruction of properties and loss of human lives. This has been the case in countries such as Iraq and Syria whereby many investors have refused to enter business deals due to the unfavorable business environment, numerous cases of corruption, high taxation, and unpredictable market trend that make them suffer very high losses. Similarly, terror has created suspicions between the neighboring countries as in the case of Israel and Gulf nations, and this has discouraged trade and other activities of economic importance.

Terror has affected the economy of the Middle East in that it has led to the poor employment opportunities. Countries that are rampant to terror attacks record very high level of unemployment (“Voices and Views: The Middle East and North Africa” n.p.). The major reason is that there is decreased investment. Consequently, due to the limited employment opportunities, the government is unable to get money in the form of taxes to cater for its projects such as security. Additionally, when there is decreased employment opportunities, the living condition of the citizens also tend to worsen because the per capita income is greatly reduced. Similarly, the GDP is also low thus indicating that there is no proper access to services such as healthcare among others (Abadie 1). The resultant impact of low employment rates, on the other hand, includes the increased crime rates as people would need to to something to make ends meet thus initiating social conflicts. The lack of employment opportunities is often associated with high poverty levels and increased crime rates.

Countries in the Middle East are among the major tourist destinations in the world. For a long period, tourists continued to flock from various regions across the world to see the unique culture. One of the recent tourist attraction sites is the annual trade fair in Saudi Arabia and the mountains. However, because of terrorism, this trend has significantly reduced as many people especially non-Muslims prefer visiting other countries such as Africa and Europe due to security concerns. The impact of this situation on the economy is that it has led to the decline in hotel industry in UAE (WSJ). Many hotels that used to provide services for travelers have been closed due to low number of tourists. In addition, high operational cost required for the maintenance of the hotels cannot be managed with little income. The government has also faced some problems. For instance, following the decline in tourism, there has been a general decrease in revenue collection which has, in turn, slowed down development projects and increased taxes so as to cater for the budget requirements.

The effect of terrorism has also been seen in the countries’ education systems. Recent statistics indicates that there is a high number of school drop-outs in the Middle East especially in war-torn countries (Krueger, Alan and Male?kov? 5). Many young boys of school-going age drop out and join the terror groups because of social, economic, and political factors. Consequently, girls are being abducted from schools and forced to wed some of the terror men thus being denied the basic right to education. The long-term impact of this is that many UAE countries will not have the qualified and literate personnel to manage their rich oil reserves. Additionally, with the lack of proper education systems, it is likely that the Middle East countries will face challenges such as unemployment. Consequently, there will be difficulties in integrating with people in different cultures because of the high illiteracy levels that have been brought about by high terrorism rates and activities involvement of the younger generation in criminal activities.

Terrorism has affected the economies of countries in the Middle East in that it can hinder trading relations with other countries from different regions. Some of the countries such as Iraq, Iran and Turkey have been faced with various challenges when it comes to international trade (“The Economist”). Due to what the western countries perceive as support of terror, sanctions and other trade restrictions have been imposed on these countries. For instance, Iran and South Korea are some of the countries that have been greatly hit by this problem. In cases whereby there have been sanctions against import of oil and other products from these countries, such economies have often suffered because there has been decreased income from foreign exchange and thus revenue decline. As a result, development and other government projects have been put at a standstill; thus, living conditions have worsened because the government cannot manage to pay for the essentials such as life assurance and hospital services for its citizens.

Additionally, another negative impact of terrorism in the Middle East is that it has led to the increase in the number of internally displaced persons and refugee crisis. A recent example of this is the Syria crisis whereby thousands of people have been displaced due to the fear of possible attacks (“Voices and Views: The Middle East and North Africa” n.p.). When the war victims migrate from their regions to the other countries, this affects the economy of the host country as the demand for medical supply and food increases. The host country and the global community, as a result, must ensure that this requirement is met so that lives can be saved. In some cases, terrorists have been known to travel alongside these caravans carrying with them weapons that are used to initiate further wars between the countries. The resultant impact is that in the long run, war spreads further and the economy is affected since the money used to help the internally displaced persons could have been channeled into other areas of development such as infrastructure, security and other important spheres.

Lastly, the effect of terror can be seen in the aftermath of the event. Terror activities are usually accompanied by property destruction and death of people. Even when the stability and security is gained, recovering is a huge challenge for many economies because roads are usually in a poor condition; there is no proper health care but many institutional challenges. The new government is usually faced with a lot of problems when creating cohesion and ensuring peaceful co-existence between the parties. Similarly, in extreme cases, due to the death of skilled personnel, many countries in the Middle East have often been faced with the challenge of outsourcing of experienced personnel from other countries to enable the development of the country so as to resume the economy. Additionally, terror attacks have been known to cause overreactions and discrimination. Terrorism has led to islamophobia and other forms of religious discrimination that have greatly undermined Muslim abilities (Jackson 6).


In conclusion, it is, therefore, evident that the terror has had a lot of effects on the economy of the Middle East. To the majority of the states, terrorism is a curse and should be done away with at any cost. Terrorism cripples the image and economy of the country and exposes frailties by provoking external and internal fears. Conclusively, terror attacks have resulted in declining employment rates, decreased investment opportunities, and low number of tourists. Therefore, there appeared such problems as decreased revenue for the government, early school dropout among the youths to join the terror groups, poor trade relations, and imposing of trade sanctions. The resulting impact is that there has been a significant drop in revenue, and governments are thus unable to meet the needs of their citizens which results in poor lifestyles and even death of many people.

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