Economic growth in democracy is accomnied by increasing inequalities among the people.justify wth examples.
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Politically motivated violence has important economic effects. Apart from the direct impact of terrorism on its victims, it deters investment in education and businesses. And the fear of violence has driven millions of people away from their homes every year, subjecting them to terrible hardships.
The economic effects of violence can also be felt in the wider economy. Political violence fuels an element of fear that amplifies the effects of individual attacks. As fear spreads, citizens may question whether governments have the power to provide security, which can have further detrimental economic effects.
Studying these issues is important but difficult without the right kind of data. The fear of violence can be spread by information in the media and online, but quantifying sentiments is extremely hard. In addition, high-quality data on the economic activity that is affected by such sentiments is typically scarce in countries where violence is most prevalent. In forthcoming research, we gathered insights from a novel source to address both these hurdles in the context of violent incidents in Tunisia, Egypt, Morocco, Turkey and Israel in the 2010s. We can now consider monthly consumer spending pattern insights based on Mastercard’s anonymized and aggregated transaction data in these countries — which the Mastercard Center for Inclusive Growth has allowed us to leverage.
These unique insights provide a window into economies that went through significant political and social turmoil like Egypt in 2011 or Turkey in 2016 — and are valuable for academic research. They allow us to analyze whether violence in one location affects economic activity elsewhere in the country, thereby capturing the extent to which fear influences spending among residents. In addition, we can analyze violence’s effect on tourism — a sector that is crucial for the region, and a source of low-skilled jobs. Tourism in the region has been in a steady decline since there was a surge in violence. With a better sense of the countries from which tourist segments originate, we now can monitor news coverage in those countries to separate the perceptions of safety from the violence measured at the destination, to study the economic effects.
For example, in June 2015, a gunman killed 39 tourists on a beach in Sousse, Tunisia. Most of the victims were British citizens, and the news coverage in the United Kingdom was intense. The chart below plots anonymized and aggregated indexed spending by British visitors in Tunisia and also those from Germany, where news coverage of the incident was less intense.
The economic effects of violence can also be felt in the wider economy. Political violence fuels an element of fear that amplifies the effects of individual attacks. As fear spreads, citizens may question whether governments have the power to provide security, which can have further detrimental economic effects.
Studying these issues is important but difficult without the right kind of data. The fear of violence can be spread by information in the media and online, but quantifying sentiments is extremely hard. In addition, high-quality data on the economic activity that is affected by such sentiments is typically scarce in countries where violence is most prevalent. In forthcoming research, we gathered insights from a novel source to address both these hurdles in the context of violent incidents in Tunisia, Egypt, Morocco, Turkey and Israel in the 2010s. We can now consider monthly consumer spending pattern insights based on Mastercard’s anonymized and aggregated transaction data in these countries — which the Mastercard Center for Inclusive Growth has allowed us to leverage.
These unique insights provide a window into economies that went through significant political and social turmoil like Egypt in 2011 or Turkey in 2016 — and are valuable for academic research. They allow us to analyze whether violence in one location affects economic activity elsewhere in the country, thereby capturing the extent to which fear influences spending among residents. In addition, we can analyze violence’s effect on tourism — a sector that is crucial for the region, and a source of low-skilled jobs. Tourism in the region has been in a steady decline since there was a surge in violence. With a better sense of the countries from which tourist segments originate, we now can monitor news coverage in those countries to separate the perceptions of safety from the violence measured at the destination, to study the economic effects.
For example, in June 2015, a gunman killed 39 tourists on a beach in Sousse, Tunisia. Most of the victims were British citizens, and the news coverage in the United Kingdom was intense. The chart below plots anonymized and aggregated indexed spending by British visitors in Tunisia and also those from Germany, where news coverage of the incident was less intense.
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