War on Terror: Do Military Measures Matter? Empirical Analysis of Post 9/11 Period in Pakistan

Abstract

This paper is the first attempt to investigate the causal relationship between military spending, terrorism, and intensity of terrorism in Pakistan, by applying ARDL approach to cointegration and VECM Granger-causality analysis. The results indicate that terrorism intensity, rather than the number of terrorist incidents, is the major determinant of military spending in both short-run and long-run. The study finds unidirectional causality running from terrorism intensity to military spending. The failure of military measures to curtail terrorism and its intensity induces one to suggest improved involvement of civil intelligence agencies by raising their budgets instead of military budget.

JEL Classification: C12, C32, O16