Impact of Terrorism on Exclusive Indian Economy

Abstract

The objective of this study is to investigate at what extent Indian economy becomes the
victim of terrorism activities. However, we didn’t find any comprehensive study on this
issue, who used time series data for casual investigation between terrorism and economic
growth. This study used time series data from 1994 to 2017 to examine the impact of
terrorism attacks and their impact on Indian economy. The data analysis has done through
auto regressor distributed lags (ARDL) method. The long run results revealed that terrorism,
interest rate and unemployment have negative impact on economic growth, whereas net
trade and foreign direct investment have positive impact on growth level. While in short run
only terrorism has negative relationship on Indian economy and rest of all variables are
statistically significant. Furthermore, error correction mechanism and stability tests indicate
that model is consistence and efficient. The overall results through F-test concluded with
these remarks that model is statistically significant.