World Military Spending

Global military expenditure stands at over $1.7 trillion in annual expenditure at current prices for 2011 (or $1.63 trillion dollars at constant 2010 prices), and has been rising in recent years.

(1991 figures are unavailable. Chart uses 2010 constant prices for comparison.)
Summarizing some key details from the Stockholm International Peace Research Institute (SIPRI)’s recent trends summary:

• World military expenditure in 2010 is estimated to have reached $1.63 trillion at 2010 prices;
• This represents a 1.3 per cent increase in real terms over 2008 and a 50 per cent increase since 2001;
• This corresponds to 2.6 per cent of world gross domestic product (GDP), or approximately $236 for each person in the world;

The USA with its massive spending budget, is the principal determinant of the current world trend, and its military expenditure now accounts for just under half of the world total, at 41% of the world total;
SIPRI has commented in the past on the increasing concentration of military expenditure, i.e. that a small number of countries spend the largest sums. This trend carries on into 2010 spending. For example,

• The 15 countries with the highest spending account for over 81% of the total;
• The USA is responsible for 41 per cent of the world total, distantly followed by the China (8.2% of world share), Russia (4.1%), UK and France (both 3.6%)

Military spending is concentrated in North America, Europe, and increasingly, Asia:

Increased spending before and even during global economic crisis

The global financial and economic crisis has resulted in many nations cutting back on all sorts of public spending (often against the criticism of targeting sectors that were not responsible for the crisis), and yet military spending seems to be increasing. How is that justified?
It should be noted that just before the crisis hit, many nations were enjoying either high economic growth or far easier access to credit without any knowledge of what was to come.
A combination of factors explained increased military spending in recent years before the economic crisis as earlier SIPRI reports had also noted, for example:

• Foreign policy objectives
• Real or perceived threats
• Armed conflict and policies to contribute to multilateral peacekeeping operations
• Availability of economic resources

The last point refers to rapidly developing nations like China and India that have seen their economies boom in recent years. In addition, high and rising world market prices for minerals and fossil fuels (at least until recently) have also enabled some nations to spend more on their militaries.
China, for the first time, ranked number 2 in spending in 2008.
But even during the past year in the aftermath of the financial crisis and cries of governments cutting back, military spending appears to have been spared. How is that justified? SIPRI provides some observations:

The USA led the rise [in military spending], but it was not alone. Of those countries for which data was available, 65% increased their military spending in real terms in 2009. The increase was particularly pronounced among larger economies, both developing and developed: 16 of the 19 states in the G20 saw real-terms increases in military spending in 2009.

— Sam Perlo-Freeman, Olawale Ismail and Carina Solmirano, Military Expenditure , Chapter 5, SPIRI Yearbook, June 2010, p.1

There are some nuances, however, that can explain this, as SIPRI explains:

• Some nations like China and India have not experienced a downturn, but instead enjoyed economic growth
• Most developed (and some larger developing) countries have boosted public spending to tackle the recession using large economic stimulus packages. Military spending, though not a large part of it, has been part of that general public expenditure attention (some also call this “Military Keynesianism”
• Geopolitics and strategic interests to project or maintain power: “rising military spending for the USA, as the only superpower, and for other major or intermediate powers, such as Brazil, China, Russia and India, appears to represent a strategic choice in their long-term quest for global and regional influence; one that they may be loath to go without, even in hard economic times”, SIPRI adds.

By contrast, “when it comes to smaller countries — with no such power ambitions and, more importantly, lacking the resources and credit-worthiness to sustain such large budget deficits — many have cut back their military spending in 2009, especially in Central and Eastern Europe.” (Perlo-Freeman, Ismail and Solmirano, pp.1 – 2)
Natural resources have also driven military spending and arms imports in the developing world. The increase in oil prices means more for oil exporting nations.
The “natural resource curse” has long been recognized as a phenomenon whereby nations, despite abundant rich resources, find themselves in conflict and tension due to the power struggles that those resources bring (internal and external influences are all part of this).
In their earlier 2006 report SIPRI noted that, Algeria, Azerbaijan, Russia and Saudi Arabia have been able to increase spending because of increased oil and gas revenues, while Chile and Peru’s increases are resource-driven, “because their military spending is linked by law to profits from the exploitation of key natural resources.”
Also, “China and India, the world’s two emerging economic powers, are demonstrating a sustained increase in their military expenditure and contribute to the growth in world military spending. In absolute terms their current spending is only a fraction of the USA’s. Their increases are largely commensurate with their economic growth.”
The military expenditure database from SIPRI also shows that while percentage increases over the previous decade may be large for some nations, their overall spending amounts may be varied.