For a country to thrive economically, security is the first and foremost prerequisite.

Economic growth is not possible without the provision and the attainment of a stable and secure socio-political environment.

Historically, any nation that has reached its apogee of power has been the result of a stable environment where business and industry worked peacefully and where innovation was possible.

Below are the measures through which the economy is directly hampered by deteriorating security. Firstly, this direct relationship between security and economics is mainly because during increased security measures, the cost of doing any business increases, which is then passed on to consumers in terms of higher commodity prices. Therefore, this reduces consumer spending and, consequently, negatively impacts economic growth.

Secondly, for Multinational corporations (MNCs) to invest their capital in a country, they need a secure and stable environment. This environment should promise them the safety of their investment. While in case of any mishaps, the investor shall have access to courts to give them justice. However, the long wars against terrorism and militancy, followed by the soaring cases of extremism in Pakistan’s territory have led to a decrease in trade and investments.

This is largely because these businesses are less willing to engage in economic activities that they perceive as less insecure. On the other hand, the already existing firms and ventures are finding it difficult to survive in this catastrophic environment. Thus they are finding a way out.

These security risks also include cyber-attacks and fraud. This 5th generation of warfare has led to direct losses for the business and consumers. It has resulted in the loss of information and financial data and the disruption of critical infrastructure. Consequently, this results in direct monetary losses for companies decreased stock prices, and loss of market share. It undermines the stability and growth of the economy and harms businesses.  This has incurred the loss of many businesses and has sometimes resulted in foreign and local investors’ permanent shutdown of business activities. This, in return, leads to the loss of jobs, giving rise to unemployment.

In Pakistan’s case, the central security problem has been terrorist activities. Following becoming a frontline ally of the US against the war on terror, we changed our policies to tackling and destroying the militants. However, this prolonged war has left us in a devastating position. We, eventually, become the next breeding ground for terrorist activities.

Over the past several decades, Pakistan has experienced frequent terrorist attacks, which have resulted in significant economic losses, reduced business, and consumer confidence, and increased security spending are far-reaching.

These terrorist activities have had a long-term impact on our economy. Over the past several decades, the impacts of terrorism on the economy have been both direct and indirect. In terms of direct impact, it led to the loss of the physical infrastructure of many firms. Further, the increased costs of security measures have also raised the cost of starting and doing business, making Pakistan less competitive in the global marketplace.

Whereas, in terms of indirect costs, it has led to the businesses and consumers becoming more cautious in their spending and investment decisions, thus leading to reduced economic growth and low job opportunities for the people.

Tourism and investment have also decreased in the aftermath of terrorist activities. This eventually, has affected the local economy. For instance, the people of northern territories largely depend on tourism to earn their bread. However, since the infiltration of militants inside these areas, local and foreign tourists are reluctant to visit these places. Hence, the local industry cannot benefit from it.

Besides that, the refugee problem, a by-product of terrorism, has negatively affected Pakistan’s economy. The Afghan jihad war and the war on terror, in particular, have resulted in a large influx of refugees inside the country. It has become a liability to the state. They have burdened the country’s resources and public services, leading to increased government spending and potential social and political conflict.

Apart from that, if these refugees do not get employment, they tend to strive for illegal ways of earning their daily bread. This is evident in the number of robbery and snatching activities recorded during this period. Every day dozens of cases are reported by different police stations in Pakistan. On 4 February, 2023 alone, around 140 cases were reported in Karachi.

All in all, the impacts of security on Pakistan’s economy can be judged by the decline of foreign investments in Pakistan equities. According to a Pakistani brokerage house study, equities have declined by 83% since 2016. Further, in another study by the Karachi-based topline securities brokerage house, the investment fell to $ 6.7 billion in 2017, $ 4.4 billion in 2018, $ 4.1 billion in 2019, $3 billion in 2020, $ 2.1 billion in 2021, and $1.4 billion in 2022, to an all-time low.

Attracting the investors inside a country and growing the business activities requires both a favorable political and security environment. Without these two, the economy of any country cannot be boosted. Some other factors through which the economy of the state can be stabilized. These are fostering a stable political environment, Rule of law, Protection of property and rights, promoting a favorable business environment, developing a skilled workforce, and Encouraging innovation and entrepreneurship