Terrorism: Enumerated Impacts on Economy, Society, and State

OpinionTerrorism: Enumerated Impacts on Economy, Society, and State

By Waqas Asmat

Pakistan’s economic situation has been worsening while its needs have been growing. A major part of it has to do with the slowdown of the economic activity within the country. Not many may be aware of it, but there is a direct correlation between economic activity and terrorism in the country. It has been the reason for the closure of several industries inside the country. Moreover, studies indicate that the impact of terrorism on Foreign Direct investment (FDI) and domestic investment is negative. On the other hand, government spending is increased due to it. However, it is important to understand that despite this, the net effect of terrorism on the economy of Pakistan is negative.


An empirical study reveals that a one percent increase in terrorism reduces FDI by 0.104 percent and domestic investment by 0.039 percent. Whereas, the overall economic growth goes down 0.002 percent. These numbers might seem insignificant but only a slight decrease in economic development can hamper the lives of many people. It affects the economic activity within the domestic market as well. Many industries have been affected negatively due to terrorism.

One of these would be tourism. In Pakistan tourism is not just something that benefits the government but also brings significant opportunities to the locals of far-flung areas. Terrorism in such places has especially affected their livelihood since it has weakened the tourism industry. Domestic investment is another factor, the lack of which has weakened many sectors and affected all types of industries. In the absence of domestic investment opportunities foreign direct investment brought a significant uplift but the country is no longer experiencing this uplift either, as it has slowly perished with the growth of terrorism.

Businesses, not only run on numbers but peace and prosperity go hand in hand. In a national situation where peace is time and again jeopardized by non-state actors, progress is uncertain. An economy that is stifled by the absence of FDI and domestic investment, experiences slowed growth which becomes an overbearing condition for social development as well. The absence of economic growth can impact certain crucial social development aspects, such as education, health, and private industry.

It is imperative for Pakistan that the country get rid of this menace of terrorism. Otherwise, the country will not be able to see progress and development promptly. This stunted economic condition will affect the lives of many individuals as well as the sustainability of public and private institutions. The net effect of such a poor condition is the lack of sovereignty of the state ultimately. Pakistan’s image is badly portrayed due to terrorism in the international sphere which also generates a bad reputation for the state. It is something of great concern for the country within the Muslim and non-Muslim world as well. At the same time, Pakistan’s economic condition is a cause for concern in comparison with other countries in South Asia.

Pakistan has got many challenges, such as a weakened economy, social development challenges as well as regional and international pressures. Therefore, the country needs an across-the-board strategy to tackle them. Elimination of terrorism from the country needs to become one of the objectives of that strategy. These factors require the policymakers of the country to once again pay attention to the importance of the inclusion of internal security and peace in Pakistan within the broader framework.

The author has an MPhil in International Development Studies from Iqra University and has worked with international, public, and private organizations. He can be contacted at waqasasmat3@gmail.com



The views and opinions expressed in this article/Opinion/Comment are those of the author and do not necessarily reflect the official policy or position of the DND Thought Center and Dispatch News Desk (DND). Assumptions made within the analysis are not reflective of the position of the DND Thought Center and Dispatch News Desk News Agency.

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