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The Impact of Terrorism on Economics and Logistics Performance: An Empirical Study from the Perspective of SAARC Member States

Author

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  • Syed Abdul Rehman KHAN

    (School of Management, Xuzhou University of Technology, Xuzhou, P. R. China and School of Economics and Management, Tsinghua University, Beijing, P. R. China.)

  • Zhang YU

    (School of Economics and Management, Chang’an University, Xi’an, P. R. China)

Abstract

In this study, we investigate how terrorism and risk create impacts on logistics performance in the SAARC (South Asian Association for Regional Cooperation) member countries. This study adopted FE (Fixed Effects) methods and RE (Random Effects) as robustness. The results indicate that bombing attacks have strongly negative impacts on all logistics indices including LPIQTTI (logistics performance index: Quality of trade and transport-related infrastructure), LPIQLS (logistics performance index: Competence and quality of logistics services), and LPICCP (logistics performance index: Efficiency of customs clearance process). Due to a higher level of terrorism in the SAARC countries particularly in Pakistan, Afghanistan, and India, quality of logistics services and transport-related infrastructure is poor and/or destroyed, which directly creates disruption and a long delay in a global logistics operation. Besides, terrorism results in shrinkage to the trade and investment opportunities; and poor logistical infrastructure causes the slowdown of the economic growth of SAARC countries. As this is first research for examining the impact of terrorism on logistics operations using macro-level indicators, it will assist the policymaker to understand the consequences of terrorism on the logistics industry and make protection plan for logistics operations such as after 9/11 attacks; US built C-TRAT (Customs-Trade Partnership against Terrorism) and CSI (Container Security Initiative).

Suggested Citation

  • Syed Abdul Rehman KHAN & Zhang YU, 2020. "The Impact of Terrorism on Economics and Logistics Performance: An Empirical Study from the Perspective of SAARC Member States," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(4), pages 99-117, December.
    • Handle: RePEc:rjr:romjef:v::y:2020:i:4:p:99-117
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    More about this item

    Keywords

    macroeconomics; transport-related infrastructure; bombing attacks; and logistics performance;
    All these keywords.

    JEL classification:

    • D04 - Microeconomics - - General - - - Microeconomic Policy: Formulation; Implementation; Evaluation
    • F40 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - General
    • L62 - Industrial Organization - - Industry Studies: Manufacturing - - - Automobiles; Other Transportation Equipment; Related Parts and Equipment
    • L90 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - General

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