That Bangladesh has ultimately outpaced Pakistan insofar as the annual budgetary outlays of the two countries are concerned is a fact. A day before the presentation of Pakistan's annual budget a ($42 billion outlay) by finance minister Ishaq Dar in Islamabad, his Bangladeshi counterpart A.M.A. Muhith announced in Dhaka a $43.3 billion outlay (an increase of 30 percent over the previous 12 months). It has set a growth target of 7.2 percent. Although the country is mired in a deep political strife, it has been able to achieve around 6 percent growth rate every year since 2000. Bangladesh, formerly East Pakistan, has already performed much better than Pakistan particularly in areas such as growth, exports and accumulation of foreign exchange reserves.
Bangladesh, which shares `friendly' borders with its principal neighbor, India, however, does not feel compelled to match, let alone surpass, what Pakistan spends on its defense.
The Defense Ministry of Pakistan had underscored the need for linking budgetary allocations to threat perception, maintaining that `threat perception has increased due to current geo-political situation in the region'. There is hardly any doubt about the fact that the current 11 percent rise in Pakistan's defense budget has been necessitated by a growing threat perception in the region. Seen through the prism of India-Pakistan relationship, the China Pakistan Economic Corridor (CPEC) has thrown up for Islamabad a renewed hostility of New Delhi. Although India realizes that its growing animosity towards CPEC will not serve its long-term economic or geo-political objectives, it seeks to appease all those who are hostile to China's rise, particularly the US, in order to protect and preserve its short- and mid-term interests. Not only will its strategy worsen the Sino-Indo border dispute, it will also hurt its long-term economic prospects by alienating an economy which is on its way to becoming world's foremost economic superpower in an effective and meaningful manner.
One of the factors behind China's economic rise was its policy to make continuous efforts towards minimizing tensions and disputes with its neighbors. Since the days of Deng Xiaoping, the former Middle Kingdom has been able to resolve all of its eight land disputes except one-the border dispute. Unfortunately, however, it has so far failed to resolve most of its disputes over seas. China has been a firm upholder for regional peace and economic development, realizing that the neighboring region is undergoing profound and complex changes. The situation, therefore, has added new complicating elements to the challenges China is now facing. In the case of Turkey, the economic rise was mainly attributable to Ankara's `zero-problems with neighbors' policy, though the current Middle East turmoil has forced it to revisit its policy in relation to its neighbors, particularly Syria.
Pakistan, too, therefore must not lose sight of the profundity of the reality of 'good neighbourliness for common economic development' despite India's growing belligerence.