How Terrorism Affects Economic Performance: The Case of Pakistan

Abstract

This paper introduces a new economic model to analyzing the effects of a possible terrorist attack. This paper propose the terrorist attack vulnerability Evaluation model (TAVE-Model). The model analyzes the evolution of terrorism in three different phases: (i) origins of a terrorist attack; (ii) terrorist attack; (v) post-terrorist attack effects. In addition, the TAVE-Model is introducing a serial of new indicators such as economic desgrowth (-δ), intensity of terrorist activities (αi), terrorist attack losses (-π), economic wear (Π) under a potential terrorist attack, level of terrorist attack tension (ζ), level of terrorist attacks monitoring (η) and total economic leaking (Ωt) under a potential terrorist attack. Finally, this paper made a simulation to evaluate from a theoretical perspective the impact of a possible terrorist attack anywhere and anytime. Finally, we applied on Pakistan the TAVE-Model to analyze how cause and effects of terrorism that can affect directly on the economic performance in this country.

Keywords: Terrorism, Economic Modeling, Economic Desgrowth

JEL Classification: R11, R12