Impact of terrorism on Pakistan

(Rehan Ashraf, Kahuta)

(International and economical aspects)

It is usually observed that a firm may desire to expand internationally because marketing opportunities exist over there. But while planning to expand internationally, a firm can take certain steps to check either it is favorable for the firm to start its business in other areas (internationally) or not. There are many factors while going internationally which a firm can keep in mind, because start doing business in other countries requires a huge investments.

In the last decade it has been seen that there is instability, insecurity and political violence in the country as a result of Pakistan’s role as a front state in the global war on terrorism. It is true that Pakistan is paying a huge price in this war. However, not much work has been done on the subject specifically in tabulating the losses of Pakistan in this war. For Pakistan, even after sixteen years of active participation and trying to “do more” there seems to be no end to this war. In fact, the threat of terrorism in Pakistan has increased manifold and, as a result, there are many serious implications of this for the country.

Terrorism not only effected the social fabric of Pakistani society but also has economic repercussions for a developing country like Pakistan. In fact, terrorism affects developing country much more severely than developed ones, as developed countries have diverse

economies and terrorism results only in reallocation of resources to more secure sectors of economy, while in case of developing countries, where there is much concentration of resources in certain sectors, are more affected.

Whenever there is talk about economic cost of terrorism, it has been seen that Pakistani economy suffered a lot by the negative impact as a consequence of terrorism. But through this downturn cannot be solely blamed on terrorism as other factors can be factored in. the majors are namely the international financial crises of 2009, massive disruption of energy supply to the industrial sector and severe floods.

As by seeing the Foreign Direct Investment Inflows, it is basically the inflow of capital or investment from outside countries whether in form of any kind of assistance or full operations like multinationals etc. As FDIs produce positive productivity effect in host countries as well. The main benefit of this direct investment flow from adoption of foreign technology and knowhow through licensing agreements, replication, employee training, process innovation, and link between foreign and domestic firms.

Since the start of the anti-terrorism campaign, the pervading sense of uncertainty has contributed to capital flight as well as slowing down domestic economic activity by making foreign investors jittery. It is apprehended that Foreign Direct Investment, which witnessed a steep rise for several years was adversely affected by military operations in FATA and other areas of KP in addition to an excessive increase in the country‘s credit risk, which has made borrowing from the market extremely expensive.

Also, Pakistan's role in the war on terror has affected the country's exports, prevented inflows of foreign investment, affected the pace of the privatization programme, and slowed economic activity in general.

With that evil of terrorism, Business may be afraid to operate as normal in Pakistan when there is a talk about large enterprises because of fear that another attack will happen. Increased cost in security can cause companies to fall on economic hard time ultimately decreasing the value of their stock and hurting shareholders. Tourism industry also effects a lot by terrorism. Attacks on foreigners, kidnapping of visitors and specially attack on Srilankan team discourage the foreigners to visit here and as a result of losing foreigners Pakistan’s economy bear loss of foreigner exchange reserves. So as a result of this uncertain situation, it will be difficult for the government to make sure sustainable growth, establishment of new developing projects, implementation of policies and fair law and order situation.

Terrorism is a real threat to all nations in the world. In recent economic condition terrorism is big threat to Pakistan’s economy and business environment. If government wants to sustainable growth in every field of economy than security and safety of national assets must be make sure.

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28 May, 2017 Views: 435

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