The Impact of Terrorism on Investment and Industry in Pakistan

The objective of this research paper it to analyze the impact of terrorism on investment and industry in Pakistan. We used secondary data for the period 2002-2017. The variable of the study includes: CPI, FDI, exchange rate, employment, human capital, economic growth and tourism industry. ARDL and Error Correction Models were used to determine short run and long run relationship between variables. Our results show that that CPI has negative significant effect on FDI while exchange rate has positive and significant impact on FDI. We conclude that terrorism has significant impact on FDI, tourism, industrial growth and overall Pakistan's economy and it must be eradicated to generate conducive environment for economic activities and development of tourism and FDI.