The Contagion of International Terrorism and its Effects on the Firm in an Interconnected World

Abstract

International trade and investment economies are highly integrated and interdependent and can be exploited by organized, international terrorism. The network of inter dependencies in the international economy means that a terrorist attack has the potential to disrupt the functioning of the network, so the effects can reverberate around the world. Governments can control the distributed effects of terrorism by auditing industrial networks to reveal and protect critical hubs and by promoting flexibility in production and distribution of goods and services to improve resilience in the economy. To explain these network effects, the authors draw on the new science of complex networks which has been applied to the physical sciences and is now increasingly being used to explain organizational and economic phenomena.