At present, the South Asia is one of the regions that qualify to conduct research on issues of terrorism in this specific region where Pakistan is the highly victimized nation of such attacks. It’s not only the issue of facing terrorism but is also the accusation of providing shelter to terrorists. Therefore, it is the need of time to find actual parameters behind this brutal activity in a nation which has its strategic importance for the whole region. Many studies have tried to relate this phenomenon with a range of social, political and economic factors but ignored the role of institutions which are actually responsible for factors mentioned above. Therefore, the present study attempts to fill this gap by incorporating the role of institutional set up in the empirical model. Keeping in view the institutional constraints faced by the region, this research work will help the policy makers to know as to where, the actual flaw exist in the economic system which does not let reforms to penetrate. This is the reason that all over the world, it is acknowledged that these developing countries have less serious issues related to their policy contents. Rather the problem is becoming acute in the case of implementation process which is related to the ‘Governance Structure’ of these economies. But, if we talk about these governance issues then we must keep in mind that it is not the cause of improved or poor institutional structure, instead it is the consequence of institutional set up of a country. Hence, the root cause of policy failure or success is those institutional parameters which are involved in decision and law making process. Such crimes are found less in their quantum where law and order situation is strong due to refined and well-integrated institutional networks. Therefore, the main objective of this research work is also to discover as to how much, such activities are motivated by different types of institutions as Pakistan who is facing both the issues simultaneously, i.e., poor institutional structure and the increasing number of terrorist attacks. For this purpose, various types of institutions have explored to see their individual role and its effects. Moreover, both the long-run and short-run dynamics have been analyzed for terrorist incidents, using the method of Johansen co-integration for the period 1975-2013.
