Social Indicators Research

, Volume 127, Issue 1, pp 179–194 | Cite as

Relationship Between FDI, Terrorism and Economic Growth in Pakistan: Pre and Post 9/11 Analysis

  • Syed Jawad Hussain ShahzadEmail author
  • Muhammad Zakaria
  • Mobeen Ur Rehman
  • Tanveer Ahmed
  • Bashir Ahmed Fida


The study examines cointegration and causal relationship between FDI, terrorism and economic growth in Pakistan using quarterly frequencies for the period 1988–2010. For empirical analysis data is divided into two sub-periods i.e. pre 9/11 (1988–2001) and post 9/11 (2002–2010) periods. The results show that long run cointegration holds between FDI, terrorism and economic growth. Granger causality results indicate that there is bidirectional short and long run causality between economic growth and FDI for both sub-samples. These findings are supported by variance decomposition and impulse response analysis. The findings suggest applicability of modernization theory to explain FDI and economic growth relationship. The results also reveal that terrorism has a deteriorating impact on FDI.


FDI Terrorism Economic growth Cointegration 

JEL Classification

C13 F21 


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Copyright information

© Springer Science+Business Media Dordrecht 2015

Authors and Affiliations

  • Syed Jawad Hussain Shahzad
    • 1
    Email author
  • Muhammad Zakaria
    • 1
  • Mobeen Ur Rehman
    • 1
  • Tanveer Ahmed
    • 1
  • Bashir Ahmed Fida
    • 2
  1. 1.COMSATS Institute of Information TechnologyIslamabadPakistan
  2. 2.Modern College of Business and SciencesMuscatOman

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