oTourism is underdeveloped in Pakistan. Most of the people who visit the country are people of Pakistani descent who make up the Pakistani diaspora in the U.S. and other countries. Accordingly, the effect of tourism on the economy of Pakistan is negligible. That said, if the security situation improves, Pakistan could become a fairly popular tourist destination thanks to its unique culture and geography (Pakistan boasts a beautiful mountain terrain of the Himalayas, among other attractions). Terrorism Hinders Commerce
oAccording to a presentation of the Lahore School of Economics, terrorism has a negative impact on the national economy of Pakistan. The threat of terrorism not only diverts resources to security spending, driving up costs for businesses, but also creates instability about business prospects in the country. Businesses find it difficult to obtain bank loans and get into long-term contractual obligations. o
Insecurity Hampers Investment
oInsecurity that results from terrorism hampers the Foreign Direct Investment that goes into Pakistan. Investors fret that terrorism may lead to Islamic extremists taking power, destabilizing social and economic structures in the country.