Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/335203 
Year of Publication: 
2025
Series/Report no.: 
Discussion Paper Series No. 53
Publisher: 
University of Freiburg, Department of International Economic Policy (iep), Freiburg i. Br.
Abstract: 
This study uncovers a powerful, yet overlooked geographic dimension to terrorism's macroeconomic impact. Our findings reveal that terror's harm to FDI is profoundly shaped by attack location. Using Pakistan as a case study we show that assaults on economic and political centers cause far greater damage to FDI than attacks in peripheral areas. From 2001-2021, terrorism cost Pakistan $8.1 billion in lost FDI, eroding nearly 30% of its foreign capital stock. These results carry broad relevance, highlighting how localized violence can generate systemic, uneven macroeconomic consequences, which supports geographically calibrated policy responses to terror.
Subjects: 
terror
FDI
time series analysis
economic geography
core-periphery
Pakistan
JEL: 
F21
F52
D74
Document Type: 
Working Paper

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