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Impact of Terrorism on Investment: Evidence from Pakistan

Author

Listed:
  • Hafiz Muhammad Abubakar Siddique

    (Federal Urdu University Islamabad, Pakistan)

  • Rabia Liaqat

    (Quaid-i-Azam University Islamabad, Pakistan)

  • Kaleem Ullah

    (Federal Urdu University Islamabad, Pakistan)

Abstract

Terrorism destabilizes and demoralizes the nation, it also breeds depression and frustration in an economy. It is badly affecting factor of economic growth and development of Pakistan. In this study, we have tried to find out the impact of terrorism on domestic investment as well as foreign direct investment in Pakistan for the time frame of 1980-2015. The autoregressive distributed lag bound testing co-integration approach is used to examine the long run relationship. The results show that there is a long run relationship between terrorism and investment. The empirics also expose a negative effect of terrorism on both domestic and foreign investments while human capital and trade are playing a vital role to enhance the level of investment. The study suggests that the government should force all the people to leave the country who are illegally present. The need is to take steps to stop the illegal flow of arms and money into the country from abroad. It is the moral responsibility of all the secret agencies of Pakistan and media should work in the coordination with one another and try their utmost to detect and identify the terrorists.

Suggested Citation

  • Hafiz Muhammad Abubakar Siddique & Rabia Liaqat & Kaleem Ullah, 2017. "Impact of Terrorism on Investment: Evidence from Pakistan," Bulletin of Business and Economics (BBE), Research Foundation for Humanity (RFH), vol. 6(4), pages 195-199, December.
    • Handle: RePEc:rfh:bbejor:v:6:y:2017:i:4:p:195-199
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    References listed on IDEAS

    as
    1. Subhayu Bandyopadhyay & Todd Sandler & Javed Younas, 2011. "Foreign direct investment, aid, and terrorism: an analysis of developing countries," Working Papers 2011-004, Federal Reserve Bank of St. Louis.
    2. Solomon Kinyanjui, 2014. "The Impact of Terrorism on Foreign Direct Investment in Kenya," International Journal of Business Administration, International Journal of Business Administration, Sciedu Press, vol. 5(3), pages 148-157, May.
    3. Rehman, Faiz Ur & Vanin, Paolo, 2017. "Terrorism risk and democratic preferences in Pakistan," Journal of Development Economics, Elsevier, vol. 124(C), pages 95-106.
    4. Omay Tolga & Araz-Takay Bahar & Eruygur Ayşegül & Kiliç Ilker, 2013. "The Effects of Terrorist Activities on Foreign Direct Investment: Nonlinear Evidence from Turkey," Review of Economics, De Gruyter, vol. 64(2), pages 139-158, August.
    5. Abadie, Alberto & Gardeazabal, Javier, 2008. "Terrorism and the world economy," European Economic Review, Elsevier, vol. 52(1), pages 1-27, January.
    6. Siddique, Hafiz Muhammad Abubakar & Majeed, Muhammad Tariq, 2015. "Energy consumption, economic growth, trade and financial development nexus in south asia," MPRA Paper 71245, University Library of Munich, Germany, revised 2015.
    7. Siddique, Hafiz Muhammad Abubakar & Shehzadi, Iram & Shaheen, Asma & Manzoor, 4Muhammad Rizwan, 2016. "The impact of governance and institutions on education and poverty alleviation: a panel study of SAARC economies," MPRA Paper 71248, University Library of Munich, Germany, revised 2016.
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    Cited by:

    1. Qasim Saleem & Sidra Sidra & Abdur Rauf & Hafiz Muhammad Abubakar Siddique, 2020. "Impact of Terrorism on Economic Growth in South Asian Country," International Journal of Economics and Financial Issues, Econjournals, vol. 10(4), pages 185-191.
    2. Abdur Rauf & Hafiz Muhammad Abubakar Siddique & Qasim Saleem & Sidra, 2020. "Terrorism and International Tourism Nexus: Evidence from Pakistan," International Journal of Economics and Financial Issues, Econjournals, vol. 10(5), pages 387-393.

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    More about this item

    Keywords

    Terrorism; Investment; ARDL Bounds Testing; Pakistan;
    All these keywords.

    JEL classification:

    • C1 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General
    • P33 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - International Trade, Finance, Investment, Relations, and Aid
    • O50 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - General

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