Economic Growth and Protection of Economic Growth and Protection of Life, Property and Contract.Life, Property and Contract.

Shabib Haider SyedZahid IqbalLuqman Saeed Rabia Saeed

Problem StatementProblem StatementPakistan faces two major challenges, how

to establish and sustain democracy and how to stimulate and sustained growth? These two issues can be bridged through the quality of its institutions. The quality of institutions not only ensures the sustainability of democracy but also determines its long run economic growth. The adverse institutional structure hinders sustained growth.

ObjectivesObjectivesCompilation, construction and analysis of

time series data on terrorism, crime and suicide.

To estimate the impact of terrorism, crime and suicide on economic performance.

Objectives AchievedObjectives AchievedLiterature Review

Institutions, Terrorism, Crime and Suicide.

Data

Literature Review Literature Review Study Objectives Data Main findings

De Long and Schleifer (1993)

Impact on Institutions on Medieval Europe

City expansion 1050-1800 Positive Impact of Non Absolutist governments

Knack and Keefer (1995)

Institutions 1974-89, 97 countries, ICRG, BERI, Gastil

Positive Impact of Institutions

Alesina et al (1996) Political Instability 113, 1950-82Propensity of Government collapse

Negative impact of government collapse on Development

Knack and Keefer (1998)

Institutions, Convergence

ICRG, BERI Positive Impact

Acemoglu and Ronbinson (2003)

Relative importance of property and contarct rights

Country risk services, Polity IV Property rights have stronger impact.

Gerring et al (2005) Impact of democracy on development

Polity 2, Polity IV Positive impact of democracy on development

Literature ReivewLiterature ReivewEnders and Sandler (1996)

Impact of terrorism on FDII, Spain and Greece

13.5, 11.9 percent decrease in Spain and Greece

Abadie & Gardaezabal(2003)

Economic impact of terrorism on Basque region

1968-2000 -10 % PCI,

Bloomberg, Hess & Orphanides (2004)

Macro-economic consequences of terrorism

Panel data177 countries1968-2000

T –PCI G crowds in, I crowds out.

Barth et al (2006) Impact of terrorism on growth and capital formation

T – growth and capital

Crain and Crain (2006) Economic impact of terrorism Panel data147 countries1968-2002

Unanticipated level of incidents most significant.

Abadie and Gardeazabal (2007)

Terrorism Impact on FDI - Impact on FDI

Gaibulleov and Sandler (2006)

Economic Impact of terrorism in South Asia.

Panel Data42 Countries1970-2004

-Growth.

GTD significant predictor of investment.

Gaibulleov(2010) Economic impact of terrorism 1970-2007 No significant relation

Tayab et al (2011) Impact of terrorism on financial markets of Pakistan

Time Series- Primary data for terrorism. 2006-08

KSE index affected significantly

Literature ReviewLiterature ReviewLondono and Guerrero (2000) Direct cost of violence

in Venezuela 7 percent of GDP

Buvinic and Morrison (2000) Cost of Violence in Latin America

Health, 0.3 to 5 percent of GDP, Policing, 2 to 9 % of GDP

Anderson (2009) Cost of crime in US Per capita crime burden US $ 4118.42

Loureiro and Delfino Silve (2010) Cost of Violence - Investment and growth

Rincke (2010) 5 incidents per 1000 pop, 0.5 percent reduction In earnings.

Detotto and Otranto (2010) Impact of crime on growth

Reduces growth by 0.0004 percent

DataDataTerrorism (GTD and SATP)Crime (Major categories)Suicide (Punjab and Sindh completed.

Baluchistan and Khybar Pakhunkhwa completed since 2000)

Terrorism TrendTerrorism TrendTerrorism Trend (1981-2010)

Sectarian

9/11

Lal Masjid

Afghan Jihad final phase

Operation Clean-upWana

Baluch Insurgency

0

1000

2000

3000

4000

5000

6000

1981 1984 1987 1990 1993 1996 1999 2002 2005 2008

Incidents

Casualties

Descriptive StatisticsDescriptive StatisticsYears Incident

sWounded

Killed Casualties

Casualties per incidence

Mean Incidence

Coefficient of Variation

1980-89 186 1467 303 1770 9.5 23.25 146.88

1990-99 1977 4338 2405 6743 3.4 198.36 39.30

2000-10 3264 12997 13727 26724 8.1 331.8 78.93

1981-2000

5427 18802 16435 35237 6.49 200.16 98.36

Per capita income and Per capita income and terrorism growth rateterrorism growth rate

Methodology Methodology

3 51 2 4t t t t t t tY =At(K ,L ,Tar ,Sui ,Cri ,CIM )

t t 1 t 2 t 3 t 4 t 5 tLogY =LogAt+ LogK + LogL + LogTar + LogSui + LogCri + LogCIM t

Preliminary ResultsPreliminary ResultsVariables Coefficients

C 1.196

Log of Capital 0.224***

Log of Labor 0.201*

Log of Openness 0.056

Log of Secondary School Enrollment

0.111**

Log of Incidents -0.015***

Log of Lagged Per capita income 0.390***

***, ** and * shows significance level of one, five and ten percent respectively.

ChallengesChallengesDue to unavailability of data

prior to 2000, time series data of suicide is being constructed through newspapers. This is the first comprehensive data on suicide in Pakistan since 1980. Data cleaning and validation is taking time.

Way forwardWay forwardData on Suicide (KPK and

Baluchistan prior 2000)Estimation and Analysis