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December 03, 2008

Terror Incentives and the Decline of Tourism
Posted by Shadi Hamid

Jeff Goldberg in a recent post on, um, "how to stay alive in a terrorized hotel," recommends that travelers "stay in hotels that have already been bombed or otherwise attacked. Mumbai is a fairly safe place for travelers right now."

This is a really interesting point. After cities get hit by attacks, tourism usually declines significantly. The response that most people to have to, say, a terrorist attack in Sharm el-Sheik is, "well, let's not go to Sharm until things cool down." The "rational" response is actually to go to Sharm immediately after an attack, since it's unlikely that terrorists will bomb the same city in consecutive weeks or months (or even consecutive years). I'd actually be interested to see data on this.

From a more macro standpoint, if enough people took Goldberg's advice and either 1) kept their booking for Sharm after the occurrence of an attack, or 2) decided to go to Sharm right after the attack for either safety or symbolic reasons, then the incentives for terrorists would change. In many contexts, a major objective of terrorist attacks is to hurt the target country's economy by hurting the tourism industry. This is particularly the case in countries, such as Egypt, that disproportionately depend on the tourism sector. If launching a terrorist attack failed to have an adverse effect on tourism, then that, by itself, would probably not dissuade terrorists from attacking in the short-run, but it would likely affect their calculations in some fashion in the long-run and would probably affect the selection of targets.

The other aspect of this is the relationship between a terrorist group and the target government. One of the main points of leverage terrorists have with a given regime is that they can hold the tourism industry hostage. This obviously affects the government's response to terrorism but also on civil and political rights more generally. I don't know enough about the data in this regard to say how a smaller rather than a larger decline in tourism after a terrorist attack would affect government policy, but I imagine there would be a significant effect of some kind.

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