This Study intended to estimate the causal effect of terrorism in Pakistan in terms of output loss with the help of Synthetic Control Method (SCM). SCM is statistically advanced data driven technique that involves the construction of counterfactual of treated unit (Pakistan) on the basis of pre-defined variable of interest (GDP per capita). The Synthetic Pakistan is obtained from a convex hull of countries listed together on the basis of structural and growth similarity with Pakistan. This study contributes to the literature of growth-terrorism nexus in case of Pakistan by estimating the causal negative effect of terrorism on GDP per capita. The second major contribution is the identification of potential channels of output loss in terms of foregone domestic and foreign investment. Major findings of the model suggest that Pakistan’s economy suffered a loss of 260 dollar per capita, PPP (constant 2011 international dollar) on average during the 2007-2014 termed as a post terrorism era. The decline in the investment is found to be the major contributor to this loss with 5.27 percentage point reduction on average in the terrorism period. Moreover, the downfall of foreign capital inflows also accelerate the economic cost of terrorism with an estimated average drop of 1.57 percentage point over the post terrorism period. One of the plausible avenue for future research is the investigation of the other potential channels of the output loss in the Pakistan due to terrorism. Supervisor:- Dr. Muhammad Nasir