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==Definition of terrorism==
Terrorism is the premeditated use or threat of use of violence by individuals or
subnational groups to obtain a political or social objective through the intimidation of a large
audience, beyond that of the immediate victim. Although the motives of terrorists may differ,
their actions follow a standard pattern with terrorist incidents assuming a variety of forms:
airplane hijackings, kidnappings, assassinations, threats, bombings, and suicide attacks. Terrorist
attacks are intended to apply sufficient pressures to a government so that it grants political
concessions. If a besieged government views the anticipated costs of future terrorist actions as
greater than the costs of conceding to terrorist demands, then the government will grant some
accommodation. Thus, a rational terrorist organization can, in principle, obtain some of its goal
quicker if it is able to augment the consequences of its campaign. These consequences can
assume many forms including casualties, destroyed buildings, a heightened anxiety level, and
myriad economic costs.<br/>
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==Consequences of terrorism==
Terrorism can impose costs on a targeted country through a number of avenues. Terrorist
incidents have economic consequences by diverting foreign direct investment (FDI), destroying
infrastructure, redirecting public investment funds to security, or limiting trade. If a developing
country loses enough FDI, which is an important source of savings, then it may also experience
reduced economic growth. Just as capital may take flight from a country plagued by a civil war,
a sufficiently intense terrorist campaign may greatly reduce capital
inflows. Terrorism, like civil conflicts, may cause spillover costs
among neighboring countries as a terrorist campaign in a neighbor dissuades capital inflows, or a
regional multiplier causes lost economic activity in the terrorism-ridden country to resonate
throughout the region. In some instances, terrorism may impact specific industries as 9/11 did
on airlines and tourism. Another cost is the expensive
security measures that must be instituted following large attacks – e.g., the massive homeland
security outlays since 9/11. Terrorism also raises the
costs of doing business in terms of higher insurance premiums, expensive security precautions,
and larger salaries to at-risk employees.
<br/>
==Economic impact==
For most economies, the macroeconomic consequences of terrorism are generally modest and
of a short-term nature.<br/>
* Large diversified economies are able to withstand terrorism and not display adverse macroeconomic influences. Recovery is rapid even from a large-scale terrorist attack.
* Developed countries can use monetary and fiscal policies to offset adverse economic impacts of large-scale attacks. Well-developed institutions also cushion the consequences.
* The immediate costs of most terrorist attacks are localized, thereby causing a substitution of economic activity away from a vulnerable sector to relatively safe areas. Prices can then reallocate capital and labor quickly.
* Terrorism can cause a reallocation from investment to government spending.
* The effects of terrorism on key economic variables – e.g., net foreign direct investment – are anticipated to be greatest in small economies confronted with a sustained terrorist campaign.
* Some terrorist-prone sectors – e.g., tourism – have displayed substantial losses following terrorist attacks. In the absence of further attacks, these sectors rebound rather quickly.
* Small countries, plagued with significant terrorist campaigns, display macroeconomic consequences in terms of losses in GDP per capita.

Based on the results of this study, one can conclude that, despite of being a serious threat, terrorism did not had a big impact on the economy of the European Union countries. Most of the consequences lasted for a short-period of time, and the worst results of terrorism were saw in countries that have a large dependency of tourism as a source of revenues.

==Social impact==
The social impacts of terrorism
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==Reference==
[http://www.cba.ua.edu/~wenders/Econ_Consequences_Revised.pdf Economic Consequences of Terrorism in Developed and Developing Countries: An Overview]