World military expenditure increase of 37 per cent over the ten-years period since 1997 (SIPRI)

Recent trends in military expenditure

World military expenditure in 2006 is estimated at $1204 billion in current prices. This represents an increase of 3.5 per cent in real terms since 2005 and of 37 per cent over the 10-year period since 1997. Average spending per capita has increased from $173 in 2005 to $177 in 2006 at constant (2005) prices and exchange rates and to $184 at current prices.

World military expenditure is extremely unevenly distributed. In 2006 the 15 countries with the highest spending accounted for 83 per cent of the total. The USA is responsible for 46 per cent of the world total, distantly followed by the UK, France, Japan and China with 4-5 per cent each.

A comparison of government spending priorities between samples of countries in different per capita income groups shows that the lower the income group, the higher the priority given to military spending in relation to social spending. Over the 5-year period 1999-2003, the share of military expenditure in GDP has been kept at a constant level in the high- and middle-income country-samples, while it has decreased somewhat in the low-income sample. At the same time social spending as a share of GDP has increased in high- and low-income groups but remained relatively stable in middle-income countries.

The rapid increase in the United States’ military spending is to a large extent due to continued 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 massive increase in US military spending has been one of the factors contributing to the deterioration of the US economy since 2001. In addition to its direct impact of high military expenditure, there are also indirect and more long-term effects. According to one study taking these factors into account, the overall past and future costs until year 2016 to the USA for the war in Iraq have been estimated to $2267 billion.

In 2006 China continued its steep increase in military expenditure, for the first time surpassing that of Japan and hence replacing Japan as the country in Asia with the highest level of military expenditure and as the fourth biggest spender in the world. Amid intense discussions on the right level of Japanese military spending, Japan decided, for the fifth consecutive year, to reduce its military spending in 2006 while at the same time focusing its military budget on missile defence.

http://www.sipri.org/contents/milap/milex/mex_trends.html