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

Syed Abdul Rehman Khan () and Zhang Yu ()
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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

Journal for Economic Forecasting, 2020, issue 4, 99-117

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).

Keywords: macroeconomics; transport-related infrastructure; bombing attacks; and logistics performance (search for similar items in EconPapers)
JEL-codes: D04 F40 L62 L90 (search for similar items in EconPapers)
Date: 2020
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Handle: RePEc:rjr:romjef:v::y:2020:i:4:p:99-117