The United States military remains the largest force on the planet. The superpower’s 2016 military expenditure of $611 billion was equivalent to approximately 36% of all global military spending. U.S. military spending was also up 1.7% from 2015, the first increase after five consecutive years of decline. A number of other countries substantially increased their military budgets last year, while a number of others cut spending substantially.
The world’s nations spent $1.67 trillion on their militaries in 2016, up slightly from 2015. Based on annual military expenditures estimated by the Stockholm International Peace Research Institute (SIPRI), 24/7 Wall St. reviewed the 15 countries with the largest one-year military expenditure increases and declines.
Latvia, which continues to react to perceived threats from nearby Russia, leads the world with a military spending increase of 44%. Venezuela, after several years of economic crisis, shrunk its military budget by 56%, the most of any nation for which data is available.
In an interview with 24/7 Wall St., Nan Tian, researcher with the Arms and Military Expenditure Program at SIPRI, explained that “if there are security needs countries will spend more.” However, even if threats are perceived, economic limitations mean countries cannot increase military expenditures and may even be forced to cut spending.
With the precipitous decline in global oil prices — which remain near historic lows — national governments around the world continue to implement severe austerity measures. Of the 15 countries with the fastest shrinking militaries, 13 are oil-exporting nations.
Budget cuts of any kind need to be justified to the public. While in some nations security concerns are far greater than in others, Tian explained that “[t]he military is one of the easiest [government programs] to cut compared to say cutting health care or education.”
It is no coincidence that undiversified oil-exporting economies took the biggest hits in military budget cuts, and lack of resources is only part of the explanation. Military and oil industries often go hand-in-hand, as the need to protect energy assets has been in many cases the justification for military expansion.
“Arguments have been made by governments to say, ‘look we need to protect our resources,’ and one way is to spend more on military.”
Short-term spikes in military spending are also frequently a response to heightened regional tensions or a country’s ongoing involvement in a conflict.
As was the case in 2015, perceived threats from Russia, which used its enormous military might to annex Crimea in 2014, continue to trigger increased military budgets in Central European nations. The Baltic nations of Latvia, Lithuania, and Bulgaria are each among the countries with the fastest-growing defense budgets.
The Philippines is another example. The small island nation increased its military budget by 20% last year (25% the year before) due in large part to heightened tensions with China over fishing rights in the South China Sea.
To identify the countries with the fastest growing and fastest shrinking military budgets, 24/7 Wall St. reviewed increases in military expenditures from 2015 through 2016 as estimated by the Stockholm International Peace Research Institute (SIPRI) in its most recent annual “Trends in World Military Expenditure, 2016” report. We only considered countries with military expenditures of at least $100 million. Spending as a share of GDP and absolute spending figures for 2016 also came from SIPRI. Military expenditure data include all current and capital expenditure on:
- The armed forces, including peacekeeping forces
- Defence ministries and other government agencies engaged in defence projects
- Paramilitary forces, when judged to be trained and equipped for military operations
- Military space activities
- Military and civil personnel, including retirement pensions and social services for military personnel
- Operations and maintenance
- Military research and development
- Military aid (in the military expenditure of the donor country)
We also considered 2016 per capita GDP from the International Monetary Fund (IMF). Gross domestic product figures are based on purchasing power parity (PPP) and are in current international dollars. Population data came from the World Bank and is for 2015.
These are the countries with the fastest growing (and shrinking) military expenditures.