Relationship Between Terrorism and Economic Growth: Evidence from Pakistan

The aim of this research paper is to examine the effects of terrorism on economic growth of Pakistan during 2000-2014 period. In this respect, we used a time series data and ARDL model to analyze the number of terrorist events in the Pakistan. GDP growth rate was dependent variable and number of terrorist attacks and persons killed were independent variables. The result of the study shows that terrorist attacks have negative relationship with economic growth. We find that one percent increase in terrorist incidents caused reducing the GDP growth by 0.34 percent. We conclude that terrorism has brought significantly effect on Pakistan's our economy and we suggest that Pakistan needs peace and harmony for economic growth.