8. Military expenditure

Summary

World military expenditure in 2006 is estimated to have reached $1204 billion in current dollars. This represents a 3.5 per cent increase in real terms since 2005 and a 37 per cent increase over the 10-year period since 1997. Average spending per capita increased from $173 in 2005 to $184.

World military expenditure is extremely unevenly distributed. In 2006 the 15 countries with the highest spending accounted for 83 per cent of the world total.

The large increase in the USA’s military spending is to a great extent due to the costly military operations in Afghanistan and Iraq. Most of the increase resulted from supplementary allocations in addition to the regular budget. Between September 2001 and June 2006, the US Government provided a total of $432 billion in annual and supplemental appropriations under the heading ‘global war on terrorism’. This increase in US military spending has contributed to the rise in budget deficits, government debt and outlays on servicing these debts since 2001. Taking both immediate and long-term factors into account, the overall past and future costs until year 2016 to the USA for the war in Iraq have been estimated at $2267 billion.

In 2006 China’s military expenditure continued to increase rapidly, for the first time surpassing that of Japan and hence making China the biggest military spender in Asia and the fourth biggest in the world. Amid intense discussions, Japan decided, for the fifth consecutive year, to reduce its military spending in 2006 and to focus its military budget on missile defence.

In a comparison of government spending priorities between samples of countries in different per capita income groups, the ratio of military spending to social spending was found to be highest in those countries with the lowest per capita incomes. However, between 1999 and 2003, the share of military expenditure in GDP stayed at a constant level in the high- and middle-income country sample and decreased somewhat in the low-income sample. At the same time social spending as a share of GDP increased in the high- and low-income groups and remained relatively stable in middle-income countries.
 

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 the Leader of the SIPRI Military Expenditure and Arms Production projects.