Impact of War, Terrorism, Foreign policies, (Sanctions) on Global market
An impact is a force exerted by a new idea, concept or ideology. Some ideologies strike against the global market affecting it either directly or indirectly. These factors include War, Terrorism, Foreign policies and Sanctions.
War
War is a force carried on by force of arms between nations or parties within a state. War implants innumerable devastations and negative effects. First it damages the infrastructure and the Nations short term viability. This is due to the borrowing of money by the citizens and government in war rebuilding strategies which are financed with expensive capital resulting from lower interest rates which diminishes the value of a domestic currency.
At times war can kick-start a fledging economy, especially when its efforts are concentrated on war time production’s manufacturing base peaks. For instance, in world war two, United States of America skunked into war following the attics on pearl habour. This pulled out the country from a great depression of a fluctuating economy. Even though this viewpoint wrote history, improving the economy at the cost of lives is not philanthropic which on the other hand affects the population growth.
Terrorism
Terrorism encompasses the spread of terror to disrupt the normal functioning of the nation either by bombing important economical building or destroying personalities within the country which intern affects the trade activities in a country. It also makes it less suitable multinational companies to invest in a country where terrorist attacks are regular. It is a threat to the companies because they may experience a great loss in their invested money. Trade links between different countries are also disrupted with no reason as countries get affected by terrorism, this means that the global economy automatically suffers due to imbalances in the fore market which intern affects the buying and selling of the shares as investors cease from buying shares for fear that the company might collapse due to bad economy after experiencing terrorism, hence there is no stabilization in the global market. A nation which experiences regular terrorism, loses its popularity and tourism which is a huge revenue to the country is affected as tourists see a danger to their lives and which again has a great impact on the country’s economy because the tourism sector employs a large number of people whose wages depend on the revenues collected.
Because of terrorism, the governments have to invest a lot of money in the security sector. This affects the country indirectly because the money could be used in development projects e.g. Improvement of infrastructure, job creation and eradication of poverty. An example of disruption between trade links of countries is for instance Pakistan and India. They are two neighboring countries whose relations in today’s business are not good because of different formations of terrorist groups that were emerging in Pakistan. This has made a sub-optimal allocation of resources which affected economic growth and capital information.
Foreign Policies
Foreign policies refer to the relationships between a central government and other governments. This holds a view of the world as a system of sovereign states. The two determinants that impact on foreign policies of the involved states are local and internal influences. In global influence it matters where the country is located and who are its neighbors. Internal influences focuses mostly on the states attributes such as the type of government, level of economic development and military capabilities and what resources it has. This policies donor brings up a balance in the growth of the economy, this leads to some countries developing and others getting stuck at their bad economic situations. For example there have been great impacts on global markets in states of highest migrant settlement; this is because of competition for jobs and market for businesses as many find themselves out of the local housing market.
Sanctions
A sanction is an authoritative permission or approval that makes a cause of action; it is basically a consideration, influence or a principle that dictates an ethical choice. It may be offered when state refuses to halt its resources to another central government. Sanctions on a country falls the value of its currencies because foreign exchange may be limited in the country, this affects the rate of economic growth hence there is no competition in the local business markets due to production of similar trading items by the solid businesses in the sanctioned states. For example, The U.N, U.S and European Union sanctioned Iran for refusing to halt its nuclear enrichment forcing its currency to lose a third of its value.
In conclusion, war, terrorism, foreign policies and sanctions affect the global market either directly or indirectly together with its citizens.
Works Cited
Anurag09.hub pages.com/hub/global-market-and-terrorism. 02 february 2013. 06 march 2013.
investopedia. How global events affect forex market. 2010.
"www.reuteurs.com/article/2012/10/05/us-Iran-Sanctions-un-id USBRE8941220121005." 05 OCTOBER 2012. WWW.REUTEURS.COM. 06 MARCH 2013.
