December 16, 2010
Terrorism is a curse. The War on terror has increased the terrorism all over the world. One example of this is the situation in Pakistan. Terrorism had a dire affect on Pakistan economy and society. Terrorism has increased the rates of unemployment and poverty. Terrorism is pushing Pakistani severity toward collapse. It has affected the flow of Foreign Direct Investment FDI. It has damaged the Pakistan’s export. Background to the War on Terror
The War on terror was the U.S reaction to 9/11. On the morning, 19 al-Qaeda terrorists hijacked four commercial passenger jet airliners. The hijackers intentionally crashed two of the airliners into the Twin Towers of the World Trade Center in New York City, killing everyone on board and many others working in the buildings. Both of the buildings collapsed within two hours, destroying nearby buildings and damaging others. The hijackers crashed a third airliner into the Pentagon in Arlington, Virginia, just outside Washington, D.C. The fourth and final plane crashed into a field near Shanks Ville in rural Pennsylvania after some of its passengers and flight crew tried to retake control of the plane, which the hijackers had redirected toward Washington, D.C. No one was saved from any of the flights. The U.S responded to the attacks by launching the War on Terror, attacking Afghanistan. They believed that Al Qaeda and its founder Osama Bin Laden, who attacked the twin towers were hiding in Afghanistan. After that, the war spread rapidly and it reached Pakistan’s north side.
Impact on Economy
One of the most significant factors that has been negatively affected by terrorism is Pakistan‘s Growth Domestic Rate (GDP). Consumers who were used to going out on a daily basis and buying a large amount of goods have been afraid of to do so in recent years. This has caused a large decrease in consumer spending and that has had a very negative impact on Pakistan’s economy. As the GDP growth rate has gone down from 8.40% in 2004-05 to 5.80% in 2007-08 and more recently it has reduced to 2.10% in 2008-09(The Business Exchange). According to experience curves and studies that have been conducted, it has been concluded that it will take the Pakistan economy about 33 years to double its size. (Oluwatimilehin, 2009)
Pakistan’s economy has been negatively effected by the terrorism. The ratio of unemployment and poverty has increased after the terrorism. Population of Pakistan was 168.23 million by 2009, and out of this 25-30% of population lives below the poverty line but before terrorism it was between 18-24%. Unemployment rate in Pakistan has risen from 7% to 15.2% after the war on terror. Pakistan is an agricultural country but people are still starving to death (CIA fact book). One of the reasons for that is smuggling of foods to Afghanistan. Even on the Eid-ul-Azah Muslim’s (festival of sacrifice) there was a shortage of animal for sacrifice because of the smuggling of animals to Afghanistan.
Foreign investment (FDI) is the backbone of most of the country’s economy. Foreign investment helps economy to grow at faster rate. Terrorism has greatly affected the foreign investment in Pakistan. Foreign investment is decline to $ 910.20 Million from $1.4 Billion in 08-09. Due to decline in investment poverty and unemployment rises. Poverty has reached to 34.4% from 30.5% in 2008-09. Analysts refer to the plummeting foreign direct investment (FDI) as a sign of weakening investor confidence as a result of increase in terrorism. According to the State Bank of Pakistan, FDI has shrunk to $463 million during the first quarter of the current financial year from $1.117 billion the previous year and that reflect the low risk appetite for long term investment in Pakistan. Security concern largely impact the flow of FDI into a country. If a country is unsafe for investment than investor will move to other...