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   January 23, 2015

Detail

 



ECONOMIC COST OF TERRORISM IN PAKISTAN


Pakistan is a country which is facing devastating form of terrorism for two decades, killing many thousands of innocent people, hundreds of soldiers and numbers of security officials. It has not only ruined the life of the nation in the form of bloodsheds but made Pakistan the worst peace keeping nation among the international community. It gave rise to the number of Internal Displaced People (IDP), thus increasing unemployment.

Terrorism is considered as one of the biggest thread to the economy of the country. A decline in GDP growth, reductions in investment, lost exports, unemployment and the depreciation and inflation of incomes and exchange rates are the most affected areas of Pakistanís economy. It has limited the Foreign Direct Investment (FDI) in the country as investors felt the thread to invest inside this country. FDI is very crucial for the economic growth of Pakistan. It increases employments, strengthens industrial sectors, improves balance of payment, finances development projects, improves foreign exchange reserves and in nut shell FDI is the main source to achieve high economic growth. Due to war against terrorism Pakistan is unable to attract more inflows of FDI.

Terrorism in Pakistan cost more than US $43 billion between 2001 and 2010, the ministry reported. Foreign investment has declined from $1.4 Billion to $910.20 Million in Fy 08-09.Due to decline in investment poverty jumped from 37.5% to 41.4% in 2008-09.It has increased the expenses of the forces thus Pakistan has received total disbursement of $11,99 million from US under Coalition Support Fund (CSF) The price of security-related and civil relief operations, for instance, demonstrates the magnitude of terrorismís direct costs: Pakistan has spent an additional US $4 billion or 2.4% of the average GDP since 2007,the ministry reported. The government has also spent US $600m during this fiscal year to help the more than 3m people displaced by terrorism and counter-terrorism operations.

Terrorism has also promoted smuggling along the porous borders .According to US-Pak business council report (2009), Pakistan suffered huge loss of $35 Billion due to Afghanistanís instability. It has terribly damaged the infrastructure making the foreign and domestic trade impossible. Due to security issues the tourresium departments are in great loss. Due to terrorism, every year numbers of business minded people migrate to different European, American and many Central Asian countries in order to start their own business. This indirectly affects the industrial sectors of the country.

The government bodies should struggle together to up root the mess of terrorism from the country. They should plan many successful economic policies to meet the needs of the nation.

The policymakers should take some tangible measures in order to reduce the cost of war against terrorism and improve the security conditions in the country. Government should try to attract more foreign countries by improving the political environment of the country, which may lead to increase inflow of FDI. Finally, the exchange rate of Pakistani rupee should be strengthened in order to attract foreign investors so we might be able to gain economic stability.



BY: RUKHSANA HUSSAINI
INSTITUTE OF MANAGEMENT SCIENCES
PESHAWAR

 

 

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