Pakistan Institute of Development Economics



The Production of Terrorism in Pakistan: A Religious Market Explanation

Does intervention in religious market produce negative externalities? To explore this question, firstly, I market for religious products secondly, I provide a chronological discussion on the consequences of government interventions in the market of religion in Pakistan. It is argued that an oligopolistic market for religion exists in Pakistan, thus, it is regulated over time by both democratic and non-democratic regimes. Furthermore, it is discussed that the main intent of regulations in the religious market of Pakistan was the appropriation of rent by three players, that is, religious sect(s), incumbent governments, and cold war allies of Pakistan. However, these interventions produced negative externalities over space and time while polarising religious sects and sub-sects. Over the years, these spillovers are realised in the form of sectarian violence which slowly and gradually transformed into an extreme form of conflict, i.e., terrorism.

Faiz Ur Rehman