While the US led war on terror is going on with political rhetoric and military might, social and political scientists across the world have been expounding various hypotheses mainly in two areas, viz. (1) causes of terrorism and (2) the legal as well as political implications of aggressive unilateralism or the consequences of the war on terrorism. So far the causes are concerned, it is argued, mostly by the proponents of military option or what may be called punitive approach that terrorists are motivated by ideological extremism and political movements rather than poverty and bad economic conditions. The opponents of punitive approach are of the view that though poverty and socio-economic conditions are not the direct causes of terrorism, but these conditions do create a fertile ground for terrorism. With regard to the consequences of the war on terror, many legal and political questions are being raised. They are, for example, whether the United States attack on Afghanistan, allegedly on the ground of self-defense was legal under the United Nations Charter as such under the international law? Has the United States the right to unilaterally define global terrorism while the rest of the world does not endorse its view? Quite apart from these and many other questions, it is interesting to investigate how terrorism is linked with globalization? The author argues that economic injustice perpetrated by big powers of the global North is encouraging terrorism. The author examines the implications of the war for rights based approach to development. Part I deals with brief historical socio-economic causes of terrorism. Part II discusses globalization and terrorism linkage. Part III highlights that the war on terror is affecting rights based approach to development. Part IV answers the question: how terrorism can be encountered with economic development. Part V draws conclusions.