IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/12277.html
   My bibliography  Save this paper

The Impact of the Terrorist Attacks of 11 September 2001 on International Trading and Transport Activities

Author

Listed:
  • Walkenhorst, Peter
  • Dihel, Nora

Abstract

In the wake of the terrorist attacks on New York City and Washington, D.C., emergency measures were taken to tighten security at air and seaports as well as land border crossings. Some disruption of trade flows during the immediate aftermath of the attacks seemed almost inevitable, yet additional frictional trading costs due to tighter security have affected trade not only in North America but also world-wide and have potential to continue to do so in the medium to long term. Anecdotal evidence suggests that the short-term business environment of transport operators and trading companies has been affected by new security measures and the increased perception of the risk of terrorist attacks. Businesses faced longer delays at airports, seaports, and land-border crossings, higher expenditures on security equipment and personnel, and augmented insurance fees. There were major disruptions of trade flows in the immediate aftermath of the terrorist attacks, but over time trade operations seemed to have returned towards normal again. Also, flexible responses of businesses and customs services to the new border situation have helped to remove some temporary bottlenecks. Yet, some modest increase in frictional costs due to increased security concerns is likely to persist, even though the exact amount is hard to predict, as general economic developments mask the effect of the terrorist attacks. Some have likened the higher frictional trading costs to additional taxes on business activity or increases in border tariffs. Yet, a comparison with business spending on mandatory pollution abatement equipment seems more appropriate, as the higher expenses for the private sector provide benefits to the general public (higher environmental quality and lower risk of terrorist attacks, respectively), but are generally not accompanied by additional tax or tariff revenues for governments. Not all commodities and countries will be affected to the same extent by the increases in frictional costs. Differences across products are due to varying ratios of transport and insurance costs to goods-value, divergences in prevailing transport modes, and differing roles in the production process. For example, just-in-time deliveries in the automotive industry were markedly affected by delays due to more elaborate customs inspections. Concerning cross-country effects, intra-NAFTA trade was naturally strongly impeded by the tightening of security at US borders, but the trade of other countries with substantial exposure to North American markets, notably imports and exports of Latin American countries, were also significantly disturbed by the longer delays at borders and other frictional cost increases.

Suggested Citation

  • Walkenhorst, Peter & Dihel, Nora, 2002. "The Impact of the Terrorist Attacks of 11 September 2001 on International Trading and Transport Activities," MPRA Paper 12277, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:12277
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/12277/1/MPRA_paper_12277.pdf
    File Function: original version
    Download Restriction: no

    References listed on IDEAS

    as
    1. David L. Hummels & Georg Schaur, 2013. "Time as a Trade Barrier," American Economic Review, American Economic Association, vol. 103(7), pages 2935-2959, December.
    2. Limao, Nuno & Venables, Anthony J., 1999. "Infrastructure, geographical disadvantage, and transport costs," Policy Research Working Paper Series 2257, The World Bank.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Bagai, Shweta & Wilson, John S., 2006. "The data chase : what's out there on trade costs and nontariff barriers ?," Policy Research Working Paper Series 3899, The World Bank.
    2. Tilman Brück & Marie Karaisl & Friedrich Schneider, 2008. "A Survey of the Economics of Security," Economics of Security Working Paper Series 1, DIW Berlin, German Institute for Economic Research.
    3. Ruiz Estrada, Mario Arturo & Koutronas, Evangelos, 2016. "Terrorist attack assessment: Paris November 2015 and Brussels March 2016," Journal of Policy Modeling, Elsevier, vol. 38(3), pages 553-571.
    4. Tilman Brück & Marie Karaisl & Friedrich Schneider, 2008. "A Survey on the Economics of Security: Final Report for the European Commission, Directorate-General for Justice, Freedom and Security," DIW Berlin: Politikberatung kompakt, DIW Berlin, German Institute for Economic Research, volume 41, number pbk41, January.
    5. Bruck, Tilman & Wickstrom, Bengt-Arne, 2004. "The economic consequences of terror: guest editors' introduction," European Journal of Political Economy, Elsevier, vol. 20(2), pages 293-300, June.

    More about this item

    Keywords

    Terrorism; security; trade; transport; border delays;

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:12277. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Joachim Winter) or (Rebekah McClure). General contact details of provider: http://edirc.repec.org/data/vfmunde.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.