Effect of Terrorism on Pakistan Economy

5798 Words Jan 27th, 2013 24 Pages

Arshad Ali *

The world is currently confronting terrorism in different manifestations. After the 9/11 terrorist events, the phenomenon of terrorism has abruptly changed the socioeconomic and geopolitical situation of the world. Terrorist groups have linkages with each other and are utilising each other‟s areas for recruitment and training, exchanging illegal weapons, engaging in joint planning and ventures, and also providing administrative and other logistic support. Pakistan is also facing the menace of terrorism which is eroding the country‟s social structure, economic development and political system. The acts of terrorism are threatening Pakistan‟s law and order situation,
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Humanitarian aid. Conflict affectees, IDPs and refugees.

Fiscal costs. Including the impact on revenue and programmes for growth and to rebuild society. Economic costs. Reduced investment, flight of capital and lower growth rate.

Social costs. The impact on living standards, including health, education and wider aspects of vulnerability, taking into account the fact that conflict often harms the poor most. Cultural costs. and long-lasting. Impact on social conventions and structures, which is often severe

Source: “Estimating Conflict Cost: The Case of North West Frontier Province and Pakistan (Draft for Discussion)”, cppr.edu.pk/download/Estimating%20Conflict%20Cost%20-2009-08-20.pdf

There are some other factors as well which must be taken into account, including compensation to the aggrieved parties and destroyed private infrastructure and expenses. Moreover, the cost of dislocation of population and missed opportunities, along with the psychosocial cost, trauma, loss of loved ones and mental illness must also be factored in such cost assessments.

Consequences of terrorism

The burden on a State managing a terrorism problem may be enormous, serious and unmanageable and has severe consequences on its economic outlook. Nevertheless, some of the economic consequences of terrorism are tabled below:

Economic Dimension Economic growth.


Negative, sometimes falls dramatically.

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