5. Military expenditure

Summary

World military expenditure is estimated to have been $1339 billion in 2007—a real-terms increase of 6 per cent over 2006 and of 45 per cent since 1998. This corresponded to 2.5 per cent of world gross domestic product (GDP) and $202 for each person in the world.

The subregion with the highest increase in military expenditure over the 10-year period 1998–2007 was Eastern Europe, at 162 per cent. It was also the region with the highest increase in 2007, at 15 per cent. Russia, with a 13 per cent increase in 2007, accounted for 86 per cent of this regional increase. Other subregions with 10-year growth rates exceeding 50 per cent are North America (65 per cent), the Middle East (62 per cent), South Asia (57 per cent), Africa and East Asia (both 51 per cent). The subregions with the lowest growth in military spending over the past 10 years were Western Europe (6 per cent) and Central America (14 per cent).

The USA’s military spending accounted for 45 per cent of the world total in 2007, followed by the UK, China, France and Japan, with 4–5 per cent each. Since 2001 US military expenditure has increased by 59 per cent in real terms, principally because of massive spending on military operations in Afghanistan and Iraq, but also because of increases in the ‘base’ defence budget. By 2007, US spending was higher than at any time since World War II. However, because of the growth of the US economy and of total US Government spending, the economic and financial burden of military spending (i.e. its share of GDP and of total US Government outlays) is lower now than during previous peak spending years in the post- World War II period.

China has increased its military spending threefold in real terms during the past decade. However, due to its rapid economic growth, the economic burden of military spending is still moderate, at 2.1 per cent of GDP.

Military spending is rising rapidly in the South Caucasus—Armenia, Azerbaijan and Georgia—largely due to the region’s three ‘frozen’ conflicts and the involvement of external actors. The rises have been made possible by economic upswings largely based on oil and gas revenues.

The number of countries that increased their military spending in 2007 was higher than in recent years. The factors driving increases in world military spending include countries’ foreign policy objectives, real or perceived threats, armed conflict and policies to contribute to multilateral peacekeeping operations, combined with the availability of economic resources. 

Petter Stålenheim (Sweden) is a Researcher with the SIPRI Military Expenditure Project.

Catalina Perdomo (Colombia) is a Research Associate with the SIPRI Military Expenditure Project.

Elisabeth Sköns (Sweden) is Leader of the SIPRI Military Expenditure and Arms Production projects.