INTRODUCTION
On September 11, 2001, 19 militants associated with the al-Qaeda group hijacked four airlines and carried out suicide attacks against targets in the United States. Two of the planes were flown into the towers of the World Trade Center in New York City, a third plane hit the Pentagon just outside the Washington D.C., and the fourth plane crashed in a field in Pennsylvania. The attacks resulted in extensive death and destruction, triggering major US initiatives to combat terrorism and defining the presidency of George W. Bush. Over 3,000 people were killed during this attack including more than 400 police officers and firefighters.

LITERATURE REVIEW
From the previous studies conducted by the researchers from various countries, the findings showed that: A. Direct losses: i. Human lives ii. Property costs iii. Emergency response and clean-up costs iv. Heath effects v. Temporary housing

B. Indirect loses: i. Lost employee income from firms that closed or were cut back ii. Lost employee income from firms that were dependent on firms that were closed or cut back iii. Lost expenditures iv. Lost tax revenues

C. Costs of losses: i. Property clean-up, rescue and policing- $14 billion ii. Disabilities and trauma- $3 billion iii. Business interruption/ Training/ Liability losses- $21 billion iv. Lost wages- $ 9.6 billion

D. Raising of transactions costs: i. Higher operating costs:
Businesses experience higher operating costs, owing to increase spending on security, higher insurance premiums and longer wait times for activities. ii. Shift of resources away from the civilian labor force toward the military:
More resources diverted toward military for the use of containment of terrorism. In addition, research and development (R&D) resources may be shifted away from productive activities toward the development of new devices to thwart terrorism. iii. Shift away from globalization:
The attack has effects on firms’ investment decision because of disruption of cross border flows of goods and assets.

DISCUSSION
THE ECONOMIC IMPACT OF 9/11 ATTACKS ON UNITED STATES
The immediate costs after this were physical damage, loss of lives and earnings, slower world economic growth and capital losses on stock markets. Indirect costs include higher productivity to protecting and insuring property, public loss of confidence and reduced demand for travel and tourism. This attack effect US economic growth and productivity, cause financial instability in other countries and hamper international trade and flows. In 9/11 attack, the costs begin with the approximately $34 billion insured losses, $576 million for rebuilding the Pentagon and $7 billion for official victim compensation.
The impact of the destruction of World Trade Center which was valued $5 billion dollars in 2001 was the loss of the two buildings and other buildings in the area and the death of those were unable to leave the buildings or were killed in rescue efforts. The impact includes the destruction of businesses and personal property left in the building, closing down the transportation hub underneath and the destruction of telephone, electricity and other networks. The biggest cost in human terms is clearly the number of American lives lost in the attacks. Accounting for the loss for of those that died is more difficult, depending as is does on estimating the value of money that a victim would have been worth over his or her entire projected life.
First two years after the attack, $600 billion in economic output was destroyed, resulting in 1% decline in global GDP. Because of the large size of the US economy, US are an important market for many countries. This affected US trading partners such as Canada, Mexico and Japan. The attack threatened the core of the US financial system. The destruction of World Trade Center devastated the leading dealer in US Treasury securities, the loss of whose staff accounted for almost one quarter of those killed in New York City.
The debris from the collapsing towers and the general chaos in the area brought about the closing of the New York Stock Exchange, the major stock exchange in the US, as well as closing brokerage houses and banks in the Wall Street area. Nearly 18,000 businesses were dislocated, disrupted by 9/11. Moreover, Gross City Product (GCP) was reduced by approximately $27.3 billion. The tax revenue loss and the extraordinary expenditures for relief and recovery severely strained the New York City budget. The damage to the World Trade Center and Pentagon cost billions of repairs.
Higher oil prices caused by this attack forcing US government to spend money on oil imports that they otherwise could spend buying goods produced in the US (Joseph E. Stiglitz, 2011). The attack weakened further the already weak international economy. The aftershock of 9/11 was felt immediately in foreign equity markets, in tourism and travel, in consumer attitudes and in temporary capital flight from the US. Another channel of effect from 9/11 in increased private sector costs arising from a heightened perception of the threat from terrorism increased probability of and costs of such attacks should occur. This reflected in rising insurance costs, enhanced measures to ensure security shipments and in reduce travel and tourism.US exports of travel services dropped and some of the airlines declared bankruptcy (Dick K. Nanto, 2004).
This attack cause gestalt shift in public perceptions of threat to their security and their vulnerability to terrorist activity. This increase the need for security, require greater government expenditures to counter terrorism. Responding to the need for greater security increases cash outlays, expenditures that may reduce productivity as governments and businesses spend more on guarding lives and property rather than investing in research, technology and new equipment. The ongoing effects of 9/11 are apparent when it comes to military, defense and security spending both domestically and abroad.
The US response to 9/11 led to huge increase in military, defense and security spending. Defense spending has increased nearly $700 billion in 2010 (Bartash, 2011). Additional spending can be financed with higher taxes, less spending on other programs or additional debt. Every $1 million spent by the government on defense generates about eight jobs, but studies found that the same amount of money creates 12 to 16 jobs in other parts of economy such as education or health care. This result in 1.5 million fewer US jobs were created because of the surge in defense spending (Bartash, 2011).
The crisis has resulted in shifting resources from more productive areas into security and defense which generally are not considered factors of productive resources for economic stimulation (Olivia A. Jackson, 2008). It will take more labor and capital to produce a largely unchanged amount of goods and services which can result in slower rate of growth in national productivity per capita real income (Gail Makinen, 2002). An extension of military activities could also result in unintended consequences, such as even greater increase in terrorist activities (Olivia A. Jackson, 2008).
Other impact of this attack was that this attack leads US government to devote large amounts of R&D to the development of costly large weapon systems such as new jet fighters, nuclear submarines and carriers. Defense R&D provide advance technologies in order to enhance intelligence capabilities and supporting military forces. This are to monitor and intercept terrorists cells around the world, disrupting their logistical and financial base, limiting their access and mobility to carry out attacks. They also spend money to develop cyber security.

CONCLUSION
Following the September 11, 2001, terrorist attack on American land gave a big shock to the world. The economic impact of the 9/11 attack are still being felt by the United States. The costs and economic effects of 9/11 are large and varied. The losses are on property, human capital, businesses activity and etc. Future economic research should be done to investigate more about the impact of 9/11 attack has on world and U.S. economy in defense economic perspective. Research also can be conducted to find ways to reduce defense expenditure and focus on other industries such as education and health.

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