Abstract
Terrorism has negatively affected growth and development and has forced an intense
economic burden on Pakistan. The general loss of self-assurance in economy and high
defense and security expenditures leads to economic distortions which further affects the
economic growth and instability in the country. This study analyzes empirically the long
and short-run impact of terrorism on the economic growth of Pakistan during 1980-2016
and suggests suitable policy measures to control the problems arising from the terrorism.
The results of Auto Regressive Distributed Lag (ARDL) approach to co-integration reveals
a long-term relationship among economic growth and independent variables during this
period. The ARDL results reveal that terrorism is one of the main hurdles in the way of
economic growth in Pakistan. Trade openness, human capital is the supporting factors in
boosting economic growth. The results of Error Correction Mechanism (ECM) indicate
that even in the short-run terrorism can deteriorate the economic growth of Pakistan. The
negative impact of terrorism on the economy is proved beyond doubt from the findings of
the study, thus, the study suggest that government should focus more on the basic causes
of domestic terrorism and should emphasize on the awareness programs. The government
should also focus on the reduction in the income inequality among the citizens as it is
considered one of the key reasons to upsurge the terrorist activities among the deprived
classes in the society.
Fariha Sami, Munir Khan Khattak. (2017) The Impact of Terrorism on the Economic Growth: An Empirical Study of Pakistan, The Journal of Humanities & Social Sciences, Volume-25, Issue-2.
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