The Impact of Counter-terrorism Effectiveness on Economic Growth of Pakistan: An Econometric Analysis

Mubashra, Sana and Shafi, Mariuam i (2018): The Impact of Counter-terrorism Effectiveness on Economic Growth of Pakistan: An Econometric Analysis.

Abstract

Abstract The purpose of present study is to explore theoretically and empirically the impact of counterterrorism effectiveness on economic growth of Pakistan. The data for counter-terrorism components construct from GTD and data for growth variables gathered from WDI for the time 1980 to 2015. This study developed “negative binomial regression model” for investigating the magnitude and significance of counter-terrorism effectiveness. It also uses the ARDL bound test and causality analysis for examining the causal relationship between economic growth and counter-terrorism effectiveness. This study further identifies that there are three types of proactive strategies used by Government and military authorities to reduce violence: civilian policies, peace accords and military operations. The result shows that there are long term impacts of counter-terrorism policies on economic growth. The findings also imply that counter-terrorism strategies may not be able to restrict violence and incapacitate militant’s organization and their sleeper cell if it lacks strong political support. The present work is raw evidence for the effort level of authorities and their preemptive strategies that leads to the significant breakdown effect to curb terrorism across the country.

• Item Type: MPRA Paper
• Language: English
• Keywords: Counterterrorism: Causality: Military operations: Negative binomial
• Subjects: K - Law and Economics > K4 - Legal Procedure, the Legal System, and Illegal Behavior > K42 - Illegal Behavior and the Enforcement of Law

References

Abadie, A. and J. Gardeazabal (2008). "Terrorism and the world economy." European Economic Review 52(1): 1-27.

Anwar, M. A., Z. Rafique, et al. (2012). "Defense spending-economic growth nexus: A case study of Pakistan." Pakistan Economic and Social Review: 163-182.

Atkinson, S. E., T. Sandler, et al. (1987). "Terrorism in a bargaining framework." the Journal of Law and Economics 30(1): 1-21

Barros, C. P. (2003). "An intervention analysis of terrorism: The Spanish ETA case." Defence and Peace Economics 14(6): 401-412.

Barth, J. R., T. Li, et al. (2006). "Economic impacts of global terrorism: from Munich to Bali."

Blomberg, S. B., G. D. Hess, et al. (2002). Terrorism from within: An economic model of terrorism, Working paper series//Claremont Institute for Economic Policy Studies.

Bravo, A. B. S. and C. M. M. Dias (2006). "An empirical analysis of terrorism: Deprivation, Islamism and geopolitical factors." Defence and Peace Economics 17(4): 329-341.

Collier, P. and A. Hoeffler (1998). "On economic causes of civil war." Oxford economic papers 50(4): 563-573.

Collier, P. (1999). "On the economic consequences of civil war." Oxford economic papers 51(1): 168-183.

Country Report on Terrorism (CRT), 2016. https://www.state.gov/j/ct/rls/crt/2016/

Crain, N. V. and W. M. Crain (2006). "Terrorized economies." Public Choice 128(1): 317-349.

Crenshaw, M. (1981). "The causes of terrorism." Comparative politics 13(4): 379-399.

Drakos, K. and N. Giannakopoulos (2009). "An econometric analysis of counterterrorism effectiveness: the impact on life and property losses." Public Choice 139(1): 135-151.

Dunne, P., E. Nikolaidou, et al. (2001). "Defence spending and economic growth: a causal analysis for Greece and Turkey." Defence and Peace Economics 12(1): 5-26.

Eckstein, Z. and D. Tsiddon (2004). "Macroeconomic consequences of terror: theory and the case of Israel." Journal of Monetary Economics 51(5): 971-1002.

Enders, W. and T. Sandler (1993). "The effectiveness of antiterrorism policies: A vector-autoregression-intervention analysis." American Political Science Review 87(4): 829-844.

Feridun, M. and M. Shahbaz (2010). "Fighting terrorism: are military measures effective? Empirical evidence from Turkey." Defence and Peace Economics 21(2): 193-205.

Freytag, A., J. J. Krüger, et al. (2010). The origins of terrorism: Cross-country estimates on socio-economic determinants of terrorism, Economics of Security Working Paper.

Freytag, A., J. J. Krüger, et al. (2011). "The origins of terrorism: Cross-country estimates of socio-economic determinants of terrorism." European Journal of Political Economy 27: S5-S16.

Gaibulloev, K. and T. Sandler (2008). "Growth consequences of terrorism in Western Europe." Kyklos 61(3): 411-424.

Gaibulloev, K., T. Sandler, et al. (2013). "Reevaluating terrorism and economic growth: dynamic panel analysis and cross-sectional dependence."

Global Terrorism Database (GTD), 2015. https://www.start.umd.edu/gtd/

Global Terrorism Index (GTI), 2012. http://economicsandpeace.org/reports/

Global Terrorism Index (GTI), 2015. http://economicsandpeace.org/reports/

Global Terrorism Index (GTI), 2016. http://economicsandpeace.org/reports/

Granger, C. W. (1969). "Investigating causal relations by econometric models and cross-spectral methods." Econometrica: Journal of the Econometric Society: 424-438.

Gries, T., T. Krieger, et al. (2011). "Causal linkages between domestic terrorism and economic growth." Defence and Peace Economics 22(5): 493-508.

Hyder, S., N. Akram, et al. (2015). "Impact of terrorism on economic development in Pakistan." Pakistan Business Review 839: 704-722.

Khan, A., M. A. R. Estrada, et al. (2016). "How terrorism affects the economic performance? The case of Pakistan." Quality & Quantity 50(2): 867-883.

Khan, H. (2012). Determinantsof Terrorism in Pakistan: A Time Serie Analysis.

Khan, Z. A. (2012). "Military operations in FATA and PATA: implications for Pakistan." Strategic Studies 31: 136-145.

Landes, W. M. (1978). "An economic study of US aircraft hijacking, 1961-1976." the Journal of Law and Economics 21(1): 1-31.

Lai, B. (2007). "“Draining the swamp”: an empirical examination of the production of international terrorism, 1968–1998." Conflict Management and Peace Science 24(4): 297-310.

Li, Q. (2005). "Does democracy promote or reduce transnational terrorist incidents?" Journal of Conflict resolution 49(2): 278-297.

Long, J. S. and J. Freese (2006). Regression models for categorical dependent variables using Stata, Stata press.

Lum, C., L. W. Kennedy, et al. (2006). "Are counter-terrorism strategies effective? The results of the Campbell systematic review on counter-terrorism evaluation research." Journal of Experimental Criminology 2(4): 489-516.

Malik, Z. and K. Zaman (2013). "Macroeconomic consequences of terrorism in Pakistan." Journal of Policy Modeling 35(6): 1103-1123.

Mehmood, S. (2014). "Terrorism and the macroeconomy: Evidence from Pakistan." Defence and Peace Economics 25(5): 509-534.

Mirza, D. and T. Verdier (2008). "International trade, security and transnational terrorism: Theory and a survey of empirics." Journal of Comparative Economics 36(2): 179-194.

Mirza, D. and T. Verdier (2008). "International trade, security and transnational terrorism: Theory and a survey of empirics." Journal of Comparative Economics 36(2): 179-194.

Muller, E. N. and E. Weede (1990). "Cross-national variation in political violence: A rational action approach." Journal of Conflict resolution 34(4): 624-651.

Naor 1, Z. (2006). "Untimely death, the value of certain lifetime and macroeconomic dynamics." Defence and Peace Economics 17(4): 343-359.

Pesaran, M. H. and B. Pesaran (1997). Working with Microfit 4.0: interactive econometric analysis, Oxford University Press.

Pesaran, M. H., Y. Shin, et al. (2001). "Bounds testing approaches to the analysis of level relationships." Journal of applied econometrics 16(3): 289-326.

Piazza, J. A. (2008). "Incubators of terror: Do failed and failing states promote transnational terrorism?" International Studies Quarterly 52(3): 469-488.

Rehman, F. U., M. Nasir, et al. (2017). "What have we learned? Assessing the effectiveness of counterterrorism strategies in Pakistan." Economic Modelling

Sandler, T. and W. Enders (2008). "Economic consequences of terrorism in developed and developing countries." Terrorism, economic development, and political openness 17.

Schneider, F., T. Brück, et al. (2015). "The economics of counterterrorism: A survey." Journal of Economic Surveys 29(1): 131-157.

Van Dongen, T. W. (2011). "Break it down: An alternative approach to measuring effectiveness in counterterrorism." Journal of Applied Security Research 6(3): 357-371.

Wang, S., Q. Li, et al. (2016). "The relationship between economic growth, energy consumption, and CO 2 emissions: empirical evidence from China." Science of the Total Environment 542: 360-371.