The Economic Genesis and Impact of Terrorism

The basic conclusion of this paper is that ignoring the negative welfare effects of unemployment in the form of terrorism and consequent loss of output leads to the adoption of (i) level of employment of labour which is sub-optimal, (ii) levels of employment of capital and capital/labour ratios which are higher than optimal levels, and (iii) a sub-optimal level of national output. This implies that capital intensive technological progress might not even be good for the overall growth of the economy