Question

Explain why any threats of terrorism due to friction between two countries could possibly your business, even if the terrorism has no effect on the relations between the U.S. and Mexico.

Answer 1

Terrorism between two countries effects other countries as well. Terrorism causes social unrest, fear and destruction of infrastructure. The threats of terrorism may hamper the export and imports of other concered countries which are involved. A developed country like USA has it's customer outside and in case of terror threats, the imports in other countries may be restricted which results in the loss of products and profitability also if countries import products from threatened countries, it becomes difficult to obtain regular supply. Even if import and export are not restricted, there is huge risk involved in transfer of goods and also payment is uncertain due to the presence of terrorism because countries may not be in position to pay them and hence this may lead to other country's bad debts.Therefore in both the cases third country also suffers loss however it is not as large as the threatened countries but in some way other countries are also effected.