Academic journal article The Journal of Humanities and Social Sciences

The Impact of Terrorism on the Economic Growth: An Empirical Study of Pakistan 1

Academic journal article The Journal of Humanities and Social Sciences

The Impact of Terrorism on the Economic Growth: An Empirical Study of Pakistan 1

Article excerpt

(ProQuest: ... denotes formulae omitted.)

Introduction

Terrorism, terrorists, and terror are a burning social evil, and perhaps one of the biggest problems facing the world today. Ganor (2005) defines terrorism as "the deliberate use of violence aimed against civilians to achieve political ends." 'Terrorism is a misdemeanor and crime that consistently victimizes the innocent people' (Michael, 2007). The people are not mostly the ultimate targets; they are only a means to achieve their hidden objectives. Terrorism is a state of mind rather than activity; it is a tree, and extremism provides balance food to grow the tree properly (Michael, 2007). According to Global Terrorism Index (2015), the most adversely affected countries from terrorism are: Iraq; Afghanistan; Nigeria; Pakistan; Syria; India; Yemen; Somalia; Libya; and Thailand. During the last 15 years more than 61,000 terrorist incidents have occurred which claimed over 140,000 lives all over the world. The number of deaths in 2014 increased by 80% (14,574) as compared to the previous year (Global Terrorism Index, 2015).

The global economic costs of terrorist activities have also significantly increased and reached its highest level (i.e. US$ 52.9 billion) during 2014, which were 61% more than the preceding year ($32.9 billion). The five countries (Iraq, Nigeria, Afghanistan, Pakistan and Syria) with the larger number of terrorist attacks have more than 16 million Internally Displaced Persons and refugees in 2014 (Global Terrorism Index, 2015).

Terrorism has a significant impact on the economic growth of the countries with largest number of terrorist events. The above ten most terrorism-affected countries have had their economic growth negatively affected by terrorism while countries with less terrorism has had minor impact on their economy. Terrorism-hit countries have experienced a decrease in the GDP growth rates between 0.51% and 0.8% and from 1.3 % to 2 % in investment.

Terrorism and Economic Growth in Pakistan

Pakistan took strict actions against terrorists, especially after the 9/11 incident it has supported anti-terrorist movements all over the world on all international platforms (Michael, 2007). According to Global Terrorism Index (2015), Pakistan has experienced an increase in the terrorist activities in the last 15 years. It has averaged 153 deaths per year from 1998 to 2006; from 2007 to 2014, the number per year deaths increased to 1,592 on average. Though Pakistan experienced 7 % reduction in the terrorist incidents and 25% reduction in deaths from terrorism from 2013 to 2014, it is still fourth in the world with in the number of deaths due to terrorism. In 2014, 1,821 terrorist incidents occurred killing 1,760; injuring 2,836; and damaging 2,752 properties.

In term of losses, 48,000 men were killed in various terrorist activities including suicide bombing, shelling, blasts etc. in Pakistan (The Express Tribune, 2013, July 22). Similarly, according to a report in the The Dawn (2014, Feb 23), Pakistan has incurred a loss of US $ 78 billion to its economy and infrastructure in the last 13 years. Although it is difficult to come up with precise figures showing the actual loss Pakistan has faced, yet the reported figures are really very huge

The terrorist incident of Army Public School in Peshawar, Pakistan on Dec 16, 2014 is included in one of the twenty most fatal terrorist attacks in the world in 2014 (Global Terrorism Index, 2015). Peshawar is the fourth deadliest city in the world (Global Terrorism Index, 2015). The costs of terrorism to Pakistan are rapidly increasing not only because of increasing number of terrorist attacks but also due to rising intensity and extensive nature of these terrorist activities.

Problem Statement

In theoretical framework, terrorism has negative impact on the economy of Pakistan. Terrorism destroys human and physical assets of a country and increases the costs of security; insurance; and military expenditure. …

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