Recent trends in military expenditure
World military expenditure is estimated to have been $1531 billion in 2009—a real-terms increase of 6 per cent over 2008 and of 49 per cent since 2000. This corresponded to 2.7 per cent of world gross domestic product (GDP) and $224 for each person in the world.
The subregion with the most rapid growth in military expenditure over the 10-year period 2000-2009 was Eastern Europe, at 108 per cent. The bulk of this growth (88 per cent) is accounted for by the Russian Federation. The other subregions with the largest increases since 2000 are North Africa (107 per cent), North America (75 per cent), East Asia (71 per cent), and South Asia (57 per cent). The subregion with the lowest growth in military spending over the past 10 years was Western and Central Europe (7 per cent).
The USA’s military spending accounted for 43 per cent of the world total in 2009, followed by China with 6.6 per cent, France with 4.2 per cent and the UK with 3.8 per cent.
The global financial crisis and economic recession that saw world output fall by 1.1 per cent in 2009 had little effect on world military spending. Two-thirds of countries for whom data was available increased military spending, including 14 of the top 15 spenders. The main reason for this was that most countries, especially larger economies, were using public spending to boost demand and counteract the recession, accepting the resulting large public sector deficits. While military spending generally played a small role in the ‘economic stimulus’ packages enacted, like other areas of spending it was at least preserved from cuts. However, a number of smaller economies less able to sustain large deficits did cut spending in 2009 on account of the crisis, especially in Central and Eastern Europe.
US military expenditure continued to grow in 2009, by 7.7 per cent in real terms, reaching $661 billion in current prices. The first budget of the new Obama Administration, for Fiscal Year 2010, requested a similar level of budget authority for military spending as in 2009, but the subsequent decision to further increase the US troop presence in Afghanistan by 30,000 led to an additional $30 billion being requested for the year. Overall, outlays for “National Defense” (which do not always follow the same trends as budget authority, as funds authorized in one year may be spent in the same or later years) are projected to increase to $719 billion for FY2010. Overall, the Obama budget involved some refocusing of priorities, but no major strategic shift.
One indirect consequence of the economic crisis on military expenditure was through the resulting fall in commodity prices, especially oil, which led to falls in military spending in some countries highly dependent on commodity exports, including Iraq, Venezuela and Chile – and smaller rises than in previous years in others, such as Russia, Saudi Arabia and Nigeria. The longer-term trend over the past decade, however, has been for rapid increases in military expenditure by countries in many different regions that have benefited from high natural resource revenues, especially oil and gas, both through higher prices and new discoveries and exploitation. This has led to spectacular increases in some countries over the period 2000-2009: 663 per cent in Chad, 471 per cent in Azerbaijan, 360 per cent in Kazakhstan, and 241 per cent in Ecuador.
