Impact of Terrorism on Economic Development

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The Global Impact of Terrorism on Economic Development

Abstract

The research objective that is addressed in the context of this study was to assess the scope and implications of global terrorism on economic development by way of testing the null hypothesis of “There is no global impact from terrorism on economic development” and the alternate hypothesis of “There is global impact from terrorism on economic development.” The research method that was employed for undertaking this study concerns the exploratory study to collect pertinent secondary data and suitable qualitative analysis. The key outcome of this study is that the relationship between terrorist attacks / incidents as well as economic development exists. This relationship, however, changes across the income groups. In this context, the hypothesis of the study is disapproved and confirms that terrorism impacts countries across many different ways and important one amongst them is adverse economic development.

Introduction

Terror as well as terrorism could result in substantial levels of losses for any economy with respect to nations. The losses shall chiefly be on account of the uncertainties which are brought in by way of the confidence which is lost on account of terrorism as well as the transference concerning significant portions pertaining to the resources of country towards the military expenditure (Audu and Adam 2016; Huerta Barrientosa and Longoriaa 2016; Frey and Osterloh 2017). In the other end, terrorist could in addition target in a direct manner critical sectors of the economics. The same leads to suggestions that overall purposes concerning terrorism that aims in attaining the political as well as economic demands over an illegitimate manner, represents the clear as well as evident indications for a government in being intimidated as well as create horror and fear within a society (Audu and Adam 2016; Huerta Barrientosa and Longoriaa 2016; Frey and Osterloh 2017). In different terms, overall purposes concerning terrorism lies in attaining specific political goal in the manner of creating significant pressure over the political authorities as well as affecting public interests by way of violence. In the manner described, terrorism effectively creates horror as well as fear within the society, posing an adverse threat across various domains, chiefly with respect to economy of a nation. Hence, on account of deeper influence concerning terrorism over social as well as political life concerning a country, then same in addition impacts economic development in an adverse manner (Audu and Adam 2016; Huerta Barrientosa and Longoriaa 2016; Frey and Osterloh 2017). The core reason with respect to the targeting of an economy, overall situation of the economic development shall be that it shall be highly critical indicator for success. In actual, terrorist activities, irrespective of targeting towards the disruption of macroeconomic stability across the nation, includes the economy, overall successes concerning the activities lies in the formation of effective forms of violence within the society (Audu and Adam 2016; Huerta Barrientosa and Longoriaa 2016; Frey and Osterloh 2017).

The research objective that is addressed in the context of this study was to assess the scope and implications of global terrorism on economic development by way of testing the null hypothesis of “There is no global impact from terrorism on economic development” and the alternate hypothesis of “There is global impact from terrorism on economic development.” The research method that was employed for undertaking this study concerns the exploratory study to collect pertinent secondary data and suitable qualitative analysis. The key outcome of this study is that the relationship between terrorist attacks / incidents as well as economic development exists. This relationship, however, changes across the income groups. In this context, the hypothesis of the study is disapproved and confirms that terrorism impacts countries across many different ways and important one amongst them is adverse economic development.

Literature Review

Terrorism: A Background

Terrorism refers to pre-meditated form of threats to utilize violence, or else, use violence by sub-national groups or individuals for attaining any social or else political objectives by way of intimidation over large set of audience, over and above the immediate victims (LaFree et al. 2014; Audu and Adam 2016; Huerta Barrientosa and Longoriaa 2016). However even if overall motivation of the terrorists could vary, their respective actions shall follow standard and common patterns in terms of terrorist incidents representing varied different forms like that of kidnappings, airplane hijackings, threats, assassinations, suicide attacks, and, bombings. The terrorist attacks shall be intended for applying adequate pressures over the relevant government such that the said government shall grant the specific political concession that is sought. In case the government which is besieged notes these anticipated costs concerning future actions of terrorists to be greater as compared to costs from conceding the demands of the terrorists, then the government may make certain accommodation (LaFree et al. 2014; Audu and Adam 2016; Huerta Barrientosa and Longoriaa 2016). Hence, the rational form of terrorist organization could, at the principle level, attain the goals faster if the same shall possess the ability for augmenting the overall consequences concerning the said campaign. The various consequences could hold various forms inclusive of casualties; buildings destroyed, heightened levels of anxiety, as well as varied set of economic costs (LaFree et al. 2014; Audu and Adam 2016; Huerta Barrientosa and Longoriaa 2016). In an evident manner, overall attacks during 11th September, 2001 (“9 / 11”) in United Stated possessed significant levels of costs which had been later estimated in being between the ranges of Us Dollar 80 Billion and US Dollar 90 billion inclusive of the ensuing economic / financial losses by way if reduced levels of commercial activities, compensations to the workmen, lost wages, etc. (LaFree et al. 2014; Audu and Adam 2016; Huerta Barrientosa and Longoriaa 2016).

Terrorism: Different Forms

Terrorism shall come about as two critical forms – transnational as well as domestic (Strang and Alamieyeseigha 2015; Petkova et al. 2017; Frey and Osterloh 2017). The domestic terrorism can be stated to be homegrown having consequences over concerned host nations solely, the affiliated institutions, property, citizens, policies, etc. The transnational terrorism shall comprise more than a single nation (Strang and Alamieyeseigha 2015; Petkova et al. 2017; Frey and Osterloh 2017). The underlying international aspect could arise from the targets, victims, supporters, institutions, implications or else terrorists. To take an example, 9 / 11 attack represents transnational form of terrorist event as the impacted victims had been from numerous and diverse nations, overall mission being financed as well as planned in the foreign location, terrorists themselves being  foreigners, as well as the overall implications concerning this event in terms of security, financial aspects, etc. were of global nature (Strang and Alamieyeseigha 2015; Petkova et al. 2017; Frey and Osterloh 2017). The hijacking which shall originate from one nation and yet ends in the different nations represents the example for transnational terrorism and so shall be the assassinations undertaken for political motives concerning the foreigner in the city streets. The transnational form of terrorist attacks usually encompass trans-boundary externalities, that is, authorities or else actions from one nation imposing the uncompensated form of consequences over property, person, etc. in different country. Hence, the spillover costs could ensure such that overall economic impacts from the terrorist events could transcend concerned host nation (Strang and Alamieyeseigha 2015; Petkova et al. 2017; Frey and Osterloh 2017). The attacks over World Trade Center building during the 9 / 11 attack led to the killing of numerous British nationals as well as led to ramifications with respect to United Kingdom based financial institutions. Studies have illustrated that 9 / 11 attacks influenced negatively the average returns in stock markets across the globe (Strang and Alamieyeseigha 2015; Petkova et al. 2017; Frey and Osterloh 2017). In actual, eleven days cumulative level average of abnormal returns was larger in Hong Kong, Italy, Switzerland, Amsterdam, Toronto, Paris, Frankfurt, and London stock markets as compared to New York Stock Exchange post 9 / 11 attacks (Strang and Alamieyeseigha 2015; Petkova et al. 2017; Frey and Osterloh 2017).

Terrorism: Economic Consequences

Terrorism could lead to the imposition of costs over the targeted nations by way of varied different set of avenues (Bueno Solano and Cedillo Campos 2014; Enders et al. 2016; Estrada et al. 2015). The incidents of terrorism possess economic consequences in the form of diverting the foreign direct investments (“FDI”), destruction of infrastructure, re-direction of the public investment related funds towards security, or else, adversely affecting trade (Bueno Solano and Cedillo Campos 2014; Enders et al. 2016; Estrada et al. 2015). In case of the developing nations the loss in the form of FDI reduction can lead to reduction in the economic growth as FDI represents key source for savings in these nations. In the same manner as external capital may takes flight from the nation that is plagued with civil wars, the intense form of terrorist campaigns to the sufficient extent could significantly bring down the capital inflows (Bueno Solano and Cedillo Campos 2014; Enders et al. 2016; Estrada et al. 2015). In essence, terrorism akin to the civil conflicts could result in the spillover costs amongst the nations neighboring with the terrorist campaigns across the neighbor lead to the dissuasion of the capital inflow, or else, the regional multiplier impacts lead to lost economic activities with respect to the terrorism ridden nation in resonating all through the specific region (Bueno Solano and Cedillo Campos 2014; Enders et al. 2016; Estrada et al. 2015). In certain cases, terrorism could affect specific nations akin to 9 / 11 did across the airline sector as well as the tourism sectors. The other costs concerns the expensive forms of security measures which need to be suitably instituted post the larger attacks like for example massive outlays of homeland security post the 9 / 11 attacks (Bueno Solano and Cedillo Campos 2014; Enders et al. 2016; Estrada et al. 2015). In addition, terrorism raises overall costs for undertaking business operations with respect to higher levels of premiums on insurance, security precautions that are expensive and increase costs, as well as increase in salaries for the employees at risk (Bueno Solano and Cedillo Campos 2014; Enders et al. 2016; Estrada et al. 2015).

The overall size as well as diversity concerning any specific economy has much to be linked with overall ability of the specific country in withstanding the attacks from terrorist without facing any significant forms of economic impacts (Snarr and Snarr 2016; Bilgel and Karahasan 2017). For example, the shipping industry at Yemen suffered to a great extent post attacks from the terrorist over USS Cole as well as Limburg had diverted about half of the port activities from Yemen to the other various facilities that are competitive across Oman and Djibouti on account of 300 per cent increase with respect to the premiums on insurance. In the highly developed as well as diversified economy, the losses of these forms could have influences that are temporary on account of the fact that resources get re-allocated towards other various sectors or else effective forms of security measures shall be deployed for purposes of allaying the concerns (Snarr and Snarr 2016; Bilgel and Karahasan 2017). In addition, developed economies possess effective forms of fiscal as well as monetary capabilities for limiting the macroeconomic impacts from terrorist attacks as compared to the small sized developing nations (Snarr and Snarr 2016; Bilgel and Karahasan 2017). Hence, one needs to anticipate that the developed nations shall be highly likely for displaying the reactions that are sector specific towards the terrorist attacks, whilst the developing nations shall be apt for exhibiting certain macroeconomic level consequences with respect to specific vicious attacks or else the sustained form of terror campaigns (Snarr and Snarr 2016; Bilgel and Karahasan 2017).

It is noted that there seem to be significant levels of cost distinctions which could be brought about with respect to terrorism related losses (Efobi and Asongu 2016; Serneels and Verpoorten 2015). To take an instance, direct costs comprise the immediate form of losses affiliated with the terrorist campaigns / attacks as well as comprise the damaged goods, overall value concerning lost lives, various costs affiliated to the injuries  and lost wages, structures destructed, infrastructure demolished, as well as reduction in the shorter term commercial activities (Efobi and Asongu 2016; Serneels and Verpoorten 2015). In converse, secondary or else indirect costs concerning terrorist attack affiliated consequent losses, like that of increase in premiums over insurance, increase in the security costs, increased compensation for those in the higher risk locations, as well as costs linked longer run changes resulting from terrorist attacks over the commercial activities (Efobi and Asongu 2016; Serneels and Verpoorten 2015). The indirect forms of costs shall surface in the manner of reduction in growth over the gross domestic product (“GDP”), FDI lost, changes with respect to inflation, or else the increases in unemployment. Suitable judgment shall be required to be undertaken with respect to the ways in which it can be distinguished between the indirect as well as direct costs, over which any of the distinction shall strike certain researchers in being arbitrary (Efobi and Asongu 2016; Serneels and Verpoorten 2015).

To the fortunate extent, the said distinction shall not be actually essential for characterizing the various economic impacts over terrorism, that could be represented with respect to certain macroeconomic variables like per capita form of GDP growth that is well-defined or else the microeconomic variables like reduction in the tourism affiliated income receipts (Efobi and Asongu 2016; Serneels and Verpoorten 2015). These various variables shall represent consequences from terrorism with respect to sector level or else aggregate activities. If the output is lost, damaged infrastructure as well as casualties shall be to at the sufficient extent large, and they shall impact the productive capacity of concerned economy in terms of microeconomic level and / or macroeconomic level repercussions (Efobi and Asongu 2016; Serneels and Verpoorten 2015). This identification of the impacts shall be of wider significance as compared to just tally or aggregate the losses in case policy is for ameliorating concerned economic ramifications with respect to terrorism (Efobi and Asongu 2016; Serneels and Verpoorten 2015).

In contrast to this, in case of the domestic terrorist incidents, both the perpetrators as well as the victims shall be from host nation. The bombing in the Oklahoma City during 19th April, 1995 represents an event of domestic terrorism similar to that of kidnapping concerning Parliament members by the Colombian terrorists (Efobi and Asongu 2016; Serneels and Verpoorten 2015). Various ethno-nationalism conflicts like that of the Tamil Tigers in Sri Lanka can be stated to be affiliated with the highly domestic form of terrorism, unless rebels shall aim in targeting citizens coming from other nations for publicizing their respective causes to larger world. The domestic events shall seem to outnumber the transnational terrorist acts by 8 to 1 (Efobi and Asongu 2016; Serneels and Verpoorten 2015).

Theory & Hypotheses

In the context of the literature review outcomes, the research question which shall be addressed in the context of this study shall be to assess what are the scope and implications of global terrorism on economic development.

In terms of theoretical basis that underlie this research context and objective, the same can be linked to the following frameworks / theoretical notions –

  • Terrorism can be rooted within relative forms of economic deprivation that shall manifests itself like in case of inequality within a country, poverty as well as the deficient / absent economic opportunities, wherein the violence shall be generated while there are noted discrepancy amongst what the individuals shall think in they deserving as well as what they shall receive actually over the course in the distributive / economic processes (Elbakidze & Jin 2015; Ghatak & Gold 2017; Mohan and Sinha 2016). Deficient forms of structural economic circumstances lead to frustration and the same in consequence makes violence in becoming highly likely (Elbakidze & Jin 2015; Ghatak & Gold 2017; Mohan and Sinha 2016). Across the environments wherein relative forms of economic deprivation are noted, terrorist organizations shall find it to be much easier / less costly in recruiting followers who are frustrated or else receive funding amongst its supporters (Elbakidze & Jin 2015; Ghatak & Gold 2017; Mohan and Sinha 2016). The overall absence of economic activities of non-violent could in addition fill in ranks concerning terrorist organizations in the manner of reducing overall opportunity costs concerning violence (Elbakidze & Jin 2015; Ghatak & Gold 2017; Mohan and Sinha 2016).
  • The overall roles concerning socio-economic changes in the longer run conditions of socio-economic factors also have link to terrorism (Pavlakovich Kochi and Morehouse 2017; David et al. 2015; Mutisya et al. 2018). It is argued that the terrorism and its affiliated activities shall be fostered using a process comprising modernization that shall create varied forms of strains like for example the economic changes, newer ideas akin to western cultural / ideological impacts in the Islamic nations as well as the newer forms concerning living in terms of shifting from the agricultural societies to that of urban societies (Pavlakovich Kochi and Morehouse 2017; David et al. 2015; Mutisya et al. 2018). Each of the factors stated could lead to grievances that are affiliated with the social, demographic, as well as economic strains (Pavlakovich Kochi and Morehouse 2017; David et al. 2015; Mutisya et al. 2018).
  • The political as well as institutional order has also been identified in being connected towards terrorism (Pavlakovich Kochi and Morehouse 2017; David et al. 2015; Mutisya et al. 2018). There are academic debates that are ongoing over the question that can specific system of political ideology like that of autocratic or else democratic regime shall be highly prepared for dealing with terrorism. Whilst the former could provide non-violent approach for voicing the dissent, the same in addition shall be constrained by the inherent efforts for the purposes of realize harder approaches to counter-terrorism like the basis for civil liberties being protected. The latter could capitalize over the inherent capability over harder repressions and yet could at same instance in addition generate grievances affiliated with the political disenfranchisement.
  • Political transformation as well as political instabilities shall in addition at times be considered in being the causes for terrorism and in specific within the popular discourses (Frieden and Lake 2015; Ezcurra and Palacios 2016; Mac Ginty and Richmond 2016). The said view proposes argument that the political changes in addition shall matters towards terrorism irrespective of longer run conditions of politics (Frieden and Lake 2015; Ezcurra and Palacios 2016; Mac Ginty and Richmond 2016). The changes with respect to political systems shall lead to political vacuums and the same shall be leveraged / capitalized by the terrorist groups for pushing their respective agendas (Frieden and Lake 2015; Ezcurra and Palacios 2016; Mac Ginty and Richmond 2016).
  • Economic as well as political integration have been linked with terrorism (Campos et al. 2014; Rauf et al. 2016; Baylis et al. 2017). In one end, this standpoint essentially transfers overall idea of terrorism being rooted within the socio-economic changes as well as affiliated conditions towards the global contexts (Campos et al. 2014; Rauf et al. 2016; Baylis et al. 2017). It means that in cases individuals shall be incited on account of the prevailing global orders, that is, global distribution concerning wealth which shall be perceived in being unfair, the same shall become easier with terrorist organizations for finding support in the manner building over the affiliated grievances (Campos et al. 2014; Rauf et al. 2016; Baylis et al. 2017).

Hypotheses

H0 Null Hypothesis: There is no global impact from terrorism on economic development

H1 Alternate Hypothesis: There is global impact from terrorism on economic development

Research Design & Data

Research Design

In terms of the research aim to assess what are the scope and implications of global terrorism on economic development by way of testing the null hypothesis of “There is no global impact from terrorism on economic development” and the alternate hypothesis of “There is global impact from terrorism on economic development”, it is evident that the research undertakes a deductive approach.

On account of the significant literature that is available in the context of this research context as well as in alignment to the research scope and objectives, the research shall be exploratory in nature employing secondary data to validate the hypotheses.

Research Methods & Data Collection

The specific research method that shall be employed for undertaking this study concerns the exploratory study to collect pertinent secondary data. The same shall encompass the identification of all critical literature that are relevant to the study and would have evaluated the relationship between terrorism and economic development in the global context.

The findings so collected shall be assessed, reviewed and suitable validation  of the hypothesis shall be undertaken by way of comprehensive, critical and relevant qualitative analysis.

Research Plan

Findings & Analysis

Ak et al. (2015) undertook a study of theoretical which effectively summarize various literature examining the overall relationship amongst terrorism as well as economic growth. The outcome of this theoretical study indicates that Ak et al. (2015) have attained conclusion in terms of there being inverse form of relationship amongst literature concerning terror as well as economic growth. While the earlier examinations of empirical literature were undertaken, it had been noted that the empirical form of studies had in general employed two of the econometric methods. Certain earlier articles assessed and presented as follow also examine terrorism as well as the ensuing economic reflections.

  • The initial econometric approach was reliant over studies which employ time series form of data analysis. The said approach undertakes the examination of various time periods across different nations. Abadie & Gardeazabal (2003) undertook examination of overall relationship amongst terrorism as well as Gross National Product (“GNP”) across the Basque nations. The findings presented by Abadie & Gardeazabal (2003) illustrate that post outbreak concerning terrorism during the later periods of 60s, the per capita level GDP across the Basque nations had declined to the extent of ten per cent when compared with the synthetic form of control region that has terrorism during period between 80’s and 90s.
  • Gupta et al. (2004) undertook the examination of the overall impacts from armed conflicts as well as terrorism over lower income nations as well as middle income nations. The outcome illustrates that in case there are armed conflicts within the nations, lower levels of growth as well as higher levels of inflation could be noted, leading to adverse forms of impacts over tax revenues as well as the investments.
  • Further Tavares (2004) undertook systematic form of investigation concerning the overall incidence as well as economic costs pertaining to terrorist attacks in the level of countries. It was determined that the richer nations seem to be highly perceptible in suffering from the attacks whilst their respective democracies turned to be, if anything else, lesser vulnerable as compared to other nations. In addition, one of the study quoted by Tavares (2004) and undertaken at World Bank makes an estimation that 4 per cent of decline in GDP across Israeli economy whilst Palestinian territories had suffered about 50 per cent decline between years 1994 and 2002.

Gries et al. (2011) undertook study with an objective for identifying overall links amongst intensity concerning the domestic level terrorism as well as overall rates concerning per capita level real GDP growth with respect to Western European nations. It was determined that the economic performances results in terrorist violence over robust manner solely for three in about seven nations. The findings made indicates that overall role played by economic performance over the determination of terrorist violence seem to have become significant for certain nations, whilst all of the attacked economies had been highly successful to adapt towards the threats from terrorism. By way of employing time series assesments, certain studies with respect to Turkey can be presented in the following manner –

  • Uysal et al. (2009) had made a conclusion that there are negatively impacts from terrorism over economic growth during the period between 1992 and 2001.
  • As per Sezgin (2003) who examined the spending on defense, economy as well as terrorism, overall stability and security across nations forms the key requirement with respect to economic development. In essence, there seem to be two different options with respect to government refraining from the terrorism acts. They could either increase overall spending ion defense or else spending on health and education for the purposes of upgrading overall welfare concerning people who may be affiliated with the terrorist acts.
  • Yıldırım & Ocal (2013) undertake investigation over determinants concerning provincial terrorism across Turkey considering spatial dimension as part of assessment over time period between 1990 and 2006. The results illustrates the increases with respect to income as well as schooling ratios seeming to bring down overall provincial level average for terrorism, while the increase with respect to unemployment actually enhances the same.

Blomberg et al. (2004) undertake study aided by empirical investigations over macroeconomic consequences concerning the international terrorism as well as the interactions amongst the alternate modes of the collective violence. The analysis undertaken by Blomberg et al. (2004) is on the basis of a rich and unbalanced set of panel data aided by annual level observations across 177 different nations between the year 1968 and 2000. Blomberg et al. (2004) have determined that on the average levels, overall incidence concerning terrorism could possess economic form of negative effects of significant extent over growth, though one that shall be smaller as well as less persistent to the considerable extent as compared to affiliated with either internal conflicts or else external wars. Gaibulloev & Sandler (2009) undertook the examination of overall impacts concerning terrorism with respect to economic growth across Asia between the periods of 1970 and 2004. The estimations of panel data illustrate that the attacks by transnational terrorist possess significant impacts over growth. In different terms, Gaibulloev & Sandler (2009) illustrate that additional incidents of terrorism for each million persons brings down the per capita level GDP growth to the extent of 1.5 per cent. The said impacts, however, shall be varied amongst the developed as well as the developing Asian nations. In specific with respect to developing Asian nations, the transnational form of terrorism adversely impacts per capita level income growth primarily on account of governments stimulating the security spending and the same diverting the resources away from highly productive public / private investments.

Meierrieks & Gries (2012) undertake investigation of overall relationship amongst the economic performance concerning nations as well as terrorism across eighteen different Latin American nations between the year1970 and 2007. It was determined by Meierrieks & Gries (2012) that overall link amongst terrorism as well as economic growth shall be different as per the overall development concerning the nations. In different terms, terrorism shall reduce overall growth with respect to lesser developed nations and yet the said connection shall never be noted across developed Latin American nation economies.

Akıncı et al. (2014) employed data from 152 different nations between the periods of 2002 and 2011, comprising of 30 under developed nations, 77 emerging nations and, 45 advanced nations made with two stages of the least square assessments. As per the results / outcome, Akıncı et al. (2014) noted that terrorist attacks across the three different groups of nations are actually disrupting overall process of growth in the manner of raising inflation level. In different terms, the terrorist attacks shall affect in a negative manner over the inflation growth. The said effect, however, shall be much stronger across the developing as well as the underdeveloped nations. Younas (2015) undertook investigation to see if international openness leads to the limitation of negative impacts concerning terrorism with respect to economic growth. This analysis laid emphasis over 120 different nations across a period between 1976 and 2008. The study’s findings illustrate that positive forms of interactions impacting the terrorism as well as globalization indicates that latter shall ameliorate overall adverse impacts pertaining to former over growth. The same thus aids in explaining the basis begin growth consequences emanating from terrorism differs from nation to nation as well as hold significant implications over policies.

Bezic et al. (2016) undertook examination of the impacts from terrorism over FDI across selective European Union (“EU”) as well as European Economic Area (“EEA”) nations. Bezic et al. (2016) employed dynamic form of panel data approach with respect to 29 different nations between the years 2000 and 2013. The outcome of the study indicates that the activities terrorism reduced the overall confidence as well as security amongst the investors across nations facing terrorist activities, adversely impacting overall inflows concerning FDI. The various results illustrate that negative form of indirect relationship exists amongst the terrorist activities as well as economy.

Musayev (2016) undertook investigation over potential sources concerning positive form of externalities concerning overall relationship amongst the military spending as well as economic growth by employing recent set of advances with respect to estimation methods concerning panel data as well as larger data set concerning military expenditure. In essence, the outcomes illustrate that overall impacts concerning military expenditure with respect  to growth shall in general be negative  and yet not be detrimental in a significant manner over the nations that face higher levels of internal threats as well as with respect to nations possessing larger wealth in terms of natural resource once the levels of corruption have been suitably accounted.

Conclusion

As terrorism could aid various purposes, the same is causing significant damage to various nations in varied different ways. In the study undertaken, the overall impacts with respect to economic development across many of the nations on account of the terrorist incidents were examined by using an exploratory study.

The key outcome of this study is that the relationship between terrorist attacks / incidents as well as economic development exists. This relationship, however, changes across the income groups. In this context, the hypothesis of the study is disapproved and confirms that terrorism impacts countries across many different ways and important one amongst them is adverse economic development. In actual, the reversal of the effect could act in being antidote towards overall reduction concerning the terrorist incidents. Various nations like that of Turkey are forced / preferred in having military combats to be direct methods for tackling terrorism. This approach, however, enhances the overall problem in course of time rather than reducing the same. It is proposed in this context that economic growth should be used as the indirect form of instrument in combating terrorism.

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