WHEN VIOLENCE MEETS VALUE: TERRORISM’S ECONOMIC TOLL ON PAKISTAN’S TRADE BALANCE

Abstract

The outcome of this research analyzed the effect of terrorism on Balance of Trade (BOT) in Pakistan for 2010-2025 using secondary data. Thus, we take terrorism as the independent variable and trade balance as the dependent variable. Data is taken from authentic source as Pakistan Bureau of Statistics (PBS), State Bank of Pakistan (SBP), Ministry of Finance and World Bank database. Methodologically, simple correlation and regression analysis were used as quantitative methods to assess the degree, direction and nature at which trade performance relates with terrorism. The results also reveal that, an adverse relationship exists between terrorism and trade balance (−0.44), which is significant at 1%, the fact that suggests as the terrorist attacks’ increasing its effects on Pakistan affinity partners economy responsible for frequent incidence of terrorist’s attack has discouraged them to make relation with this country in terms of investment and import or export goods. This result suggests that the economic cost of security threats is high, and highlights the necessity to institute generic measures of trade-suppression. The paper provides policy recommendations that are important for policymakers and trade representatives to enhance security in sectors closely related to international transportation, provide coordinated economic policies that reduce the risk of terrorism or respond to indications of threats of terrorism on local economies. And, in the end finally some scope for relevant activities limited by data availability and others are also mentioned as works for future research – such as sectoral/ regional studies and cross-country comparisons with other developing countries.