8. Military expenditure

Global military expenditure rose for the seventh consecutive year in 2021 to reach US$2113 billion, exceeding $2 trillion for the first time. It accounted for 2.2 per cent of global gross domestic product (GDP), equivalent to $268 per person. World military spending was 0.7 per cent higher than in 2020 and 12 per cent higher than in 2012. This upward trajectory remained unchanged despite Covid-19 pandemic-induced economic fluctuations.

While the world allocated more to the military in absolute terms, overall government budgets grew faster than military budgets. In 2021, countries allocated an average of 6.0 per cent of their total government spending to their militaries. This was down from 6.1 per cent in 2020 and from 6.6 per cent in 2012. Thus, it seems that governments are investing more funds in the military while also allocating even more to non-military expenditure.

Opportunity costs

Nonetheless, the $2 trillion spent on the military represents a lost opportunity to meet the Sustainable Development Goals (SDGs) of Agenda 2030 and the targets of the 2015 Paris Agreement on climate change. Diverting a small fraction of this sum to these goals could improve security in the broader sense and contribute towards achieving the SDGs. During 2021, various United Nations initiatives to reverse the upward trend of military expenditure were reaffirmed, including a call by the UN secretary-general for the urgent reduction of excessive military spending and greater investment in social infrastructure and human security.

Regional spending patterns

The 1.2 per cent increase in African military spending was the third consecutive year of growth. The 56 per cent increase in Nigeria, to $4.5 billion, was its highest annual increase since 1975 and heavily influenced the overall regional trend.

Military spending in the Americas fell by 1.2 per cent. Trends in the region are driven chiefly by the spending of the United States, the largest military spender in the world. US spending reached $801 billion in 2021, equivalent to 38 per cent of the global total. This was a nominal increase of 2.9 per cent but a real-terms decrease of 1.4 per cent (due to the highest rate of inflation since 1982). In 2021 the USA ended its nearly two-decade-long military presence in Afghanistan. Between 2001 and 2021, the US Government spent more than $2.3 trillion on the war there, including investing $85 billion to bolster the Afghan security forces.

The 3.5 per cent increase in military spending in Asia and Oceania continued an uninterrupted upward trend dating back to at least 1989. China’s estimated military spending of $293 billion, the second largest in the world in 2021, was a 4.7 per cent increase from 2020. Spending also rose among other major regional powers: by 0.9 per cent in India, 7.3 per cent in Japan and 4.7 per cent in South Korea.

Heightened geopolitical tensions were a significant factor in the increase of 3.0 per cent in military spending in Europe. Russia’s military spending grew for the third consecutive year in 2021 and was up by 2.9 per cent, to reach $65.9 billion. The military budget was revised upwards over the year, probably reflecting the build-up of Russian forces on the border with Ukraine.

Military spending in the Middle East fell by 3.3 per cent in 2021, largely due to the 17 per cent fall in the spending of Saudi Arabia, which accounted for 30 per cent of the regional total. Part of the regional decrease was offset by an 11 per cent increase in Iranian military expenditure, making Iran the 14th largest military spender in 2021.

Arms production and military services

The arms sales of the 100 largest arms and military services companies (the SIPRI Top 100) totalled $531 billion in 2020—the most recent year for which data is available. Arms production around the world was largely resilient to the economic downturn caused by the Covid-19 pandemic: while the global economy contracted by 3.1 per cent in 2020, the aggregated arms sales of the Top 100 increased. There were 41 US arms companies in the Top 100, with combined arms sales of $285 billion, and 5 Chinese companies, with aggregated arms sales of $66.8 billion.