Defense spending of Pakistan remains high in order to sustain a credible deterrence, significant geopolitical position in Afghan wars and combat terrorism. The study analyzes the defense spending in light of perceived and real threats to Pakistan’s security and examines its linkages with economic growth. By developing a theoretical framework to explore the different dimensions of national security, the study empirically investigates the relationship between defense spending and economic growth. Econometric techniques such as Johansen Co-integration and Granger Causality test have been applied to obtain empirical results by using a time series data from 1980 to 2010. The results indicate that there exists a long-run relationship between defense spending and economic growth where economic growth granger causes defense spending. The study also assembles fifty structured interviews from armed forces officers, civil bureaucrats and experts to analyze and bargain the gap between theory and practice. The study recommends that Pakistan should focus more on social sector development, initiate trade with India to build trust and initiate dialogue process on political and local level Taliban.