Impact of Terrorism on Economic Growth of Pakistan (1994-2020)

Abstract

Terrorism has long been a serious problem in Pakistan, affecting not only the safety and security of its residents but also its economic development. This study attempts to examine the relationship between terrorist activities and economic growth and take into consideration the ways that ongoing threats to security affect investor confidence, government expenditures, and the economy as a whole. Secondary data are taken from different sources, including the World Bank and the Global Terrorism Database, taking time series data from 1994 to 2020 and using GDP as the dependent variable, while terrorism, foreign direct investment (net inflow), and gross national expenditure are the independent variables. The long- and short-term impacts of terrorism on economic growth are estimated using the ARDL model. The study concluded that terrorism has a negative impact on Pakistan's economic growth. The findings provide significant insights into the effects of terrorism on Pakistan's economic growth, highlighting the extent to which terrorism has hindered the country's economic growth. By knowing the relationship between terrorism and economic growth, policymakers may formulate strategies to decrease the negative consequences of terrorism and advance Pakistan's sustainable economic growth.