Terrorism and Tourism: A Conjunction and Ramification in Pakistan

This study investigates the impact of terrorism activities on tourism in Pakistan by using the annual time series data from the period of 1980 to 2010. Johansen and Jeuuselius and ARDL bound testing cointegration approach confirms the valid long run relationship between terrorism and tourism. Results indicate the significant negative impact of terrorism on tourism in the long run as well as in the short run. Results of rolling window estimation method indicate that terrorism having negative coefficients throughout the sample period. Results of dynamic ordinary least square (DOLS) suggest that the results will remain the same in the future up to lead 2. Results of Granger causality test, Toda and Yamamoto Modified Wald causality test and variance decomposition test confirm the unidirectional causal relationship between terrorism and tourism, causality runs from terrorism to tourism. Hye and Khan (2012) confirm tourism led growth hypothesis for Pakistan. It is suggested that the government should play a significant role to reduce terrorism activities that should be decreased in the country to boost tourism activities that lead to increase in income from tourism in Pakistan.