Abstract:
For researchers rhetoric and clichés about terrorism and its socio-economic impacts
are not sufficient. Quantification of relationship between terrorism and its socio-economic
impacts is required. This study is an attempt to find the nature of relationship between
terrorism and macro economy of Pakistan. Casualties by terrorism are chosen as independent
variable and GDP per capita is chosen as dependent variable. Trade Openness, Aggregate
value added, and remittances are also used as independent variables. The data for all
variables is collected for the period 1980-2016 from World Bank, GTD and SATP. Unit root,
Granger Causality, Johansen Co-integration, and Error Correcting Tests are applied to check
the significant long run relationship between dependent and independent variables. It is found
that there exists a significant long run negative relationship between GDP per capita and
terrorism casualties. 1% increase in Terrorism casualties would decrease GDP by 0.027% or
vice versa. Also Value added, trade openness and remittances have significant long run
positive relationship with GDP per capita. On the basis of quantitative findings focused socioeconomic
policies can be designed for a tolerant and peaceful society with strong and growing
economy.
