America is the arms merchant to the world and is likely to sell $50 billion in weapons this year. Business may not be as good in the near term, however. Military spending among all the world’s nations totaled $1.63 trillion last year, but that was up only 1.3% from the year before. Spending includes weapons, soldiers, and the costs to maintain a country’s military infrastructure.
The U.S. defense budget is by far the world’s largest, and that has been the case since World War II. Last year that figure was just below $700 billion largely because of the wars in Afghanistan and Iraq. The US is the only nation that maintains naval, air force and ground troops in nearly every part of the world, from South Korea to Europe to the Persian Gulf.
The worldwide slowdown in military spending is a product of two things. The first is the impact of the recession and the austerity programs which have followed it. The other is that large nations such as Germany have decided that they do not need large military presences outside their borders.
Many countries have not given up on defense spending at all, but they are nations which have relatively small overall budgets. According to the Stockholm International Peace Research Institute, which provides the numbers that 24/7 Wall St. used for its analysis of global arms spending, military spending in Africa and South America rose nearly 6%. That is barely enough to make up for cuts by larger nations.
24/7 Wall St. looked at military spending in the 10 countries that are the biggest spenders over a period of a decade. China, the world’s second largest nation by GDP and largest by population, had the largest increase of any country. Its military spending rose 189% from 2001 to 2010, reaching $119 billion. Many experts believe that China under-reports its spending, which is now 2.1% of GDP. The figure is 4.8% in the US, so should China decide to match America’s spending, its military budget would be closer to $300 billion. That may take on added revalence since the Obama Administration is expected to slash the Pentagon’s budget.
A review of the numbers lead to three important questions. The first is whether the large industrial nations of Europe and Japan will continue to see high military expenses as unaffordable. The second is whether an arms race between China and the US will emerge – one which compares to the one between the Soviet Union and the US that went on from the 1950s to the 1980s. And, the last is whether wars in the developing world will continue to grow. Expenditures in places like the Middle East, North Africa, and Pakistan could certainly increase sharply soon.
There is not a weapons race now among the largest nations. There is, however, enough global unrest for that to change.
These are 24/7 Wall St.’s Ten Largest Military Powers In The World:
[ ] = estimated figure
10. Italy
> Spending 2010: $[37] Billion
> Change 2001 – 2010: [-5.8]%
> Share of GDP: [1.8]%
Italy spent the tenth greatest amount on the military in 2010. Since 2001, military spending in the country dropped 5.8%. This is the greatest decrease among all the countries featured on this list. One reason may be that the number of volunteer troops are being cut, according to the Italian nonprofit organization, the Istituto Affari Internazionali. Italy’s defense budget is expected to be cut even further this year to reduce the the country’s debt.
9. India
> Spending 2010: $41.3 Billion
> Change 2001 – 2010: 54.3%
> Share of GDP: 2.7%
India spent the fifth largest amount on their military among all the Asian countries and the ninth largest amount in the world. The country underwent the largest absolute decrease in military spending from 2009 to 2010, spending $1 billion less than the year before. This decrease will likely not amount to much in the long run because in February India increased its defense spending by 11.6%. This was done largely in response to the military strength of China and Pakistan.
8. Germany
> Spending 2010: $[45.2] Billion
> Change 2001 – 2010: [-2.7]%
> Share of GDP: [1.3]%
Although Germany has one of the world’s largest military budgets, its military spending as a percent of GDP, which is about 1.3%, is not especially high compared to other countries. It is the second smallest percent among countries on this list. Spending in 2010 decreased 1.3%, after the country’s Defense Ministry recommended Germany close several army bases and cut the number of troops from 250,000 to 180,000.
7. Saudi Arabia
> Spending 2010: $45.2 Billion
> Change 2001 – 2010: 63%
> Share of GDP: 10.4%
Saudi Arabia’s level of defense spending is all the more impressive when one considers the size of the country’s economy. The $45.2 billion the country spent in 2010 was 10.4% of the country’s GDP. That percent is more than double that of any other country on this list. Saudi Arabia also underwent the largest increase in military spending from 2009 to 2010, 4%. It had the largest absolute increase in the Middle East as well, with $1.6 billion.
6. Japan
> Spending 2010: $54.5 Billion
> Change 2001 – 2010: [-1.7]%
> Share of GDP: 1%
Japan has kept its military expenditures at about 1% of GDP since 1967. As a result, the amount spent on defense turns on the strength of the economy. While military spending in the entire East Asia region has increased by more than 55% over the last decade, Japan’s has decreased by 1.7%, according to the Institute for Policy Studies.
5. Russia
> Spending 2010: $[58.7] Billion
> Change 2001 – 2010: 82.4%
> Share of GDP: [4]%
Although Russian military spending decreased 1.4% from 2009 to 2010, it increased 82.4% over the entire decade. According to the BBC, Russia has plans to spend $650 billion on defense between now and 2020. According to Russian Finance Minister Alexei Kudrin, this money would be used to modernize the country’s armed forces. It currently relies heavily on the nuclear arsenal built during the Cold War.
4. France
> Spending 2010: $59.3 Billion
> Change 2001 – 2010: 3.3%
> Share of GDP: 2.3%
While France’s military spending increased 3.3% over the past decade, it decreased a stunning 8.4% from 2009 to 2010. This decrease, which is by far the largest on our list, is mostly the result of the global economic crisis. The crisis was severe in Europe, and hit France especially hard. This has caused the government under Nicolas Sarkozy to make large cuts to rein in the deficit.
3. UK
> Spending 2010: $59.6 Billion
> Change 2001 – 2010: 21.9%
> Share of GDP: 2.7%
The United Kingdom surpassed France in amount spent on military in 2010. Despite a growth of 21.9% in spending over the decade, the UK’s military expenditures dropped 0.8% from 2009 to 2010. This amount will most likely decrease more in 2011. In late 2010, Prime Minister David Cameron announced that the country would be making defense cuts, including cutting 17,000 troops, to help bring down the debt. The country will instead focus more on its special forces, which includes its counter-terrorism units.
(Also Read: Finland May Be New Block To EU Bailouts)
2. China
> Spending 2010: $[119] Billion
> Change 2001 – 2010: 189%
> Share of GDP: [2.1]%
China spent the second greatest amount on the military in 2010, and the amount is growing quickly. From 2001 to 2010, the country’s military expenditures increased 189%. This is more than double the amount of any other country on this list. Weak economic performance in 2009 caused the 2009-2010 increase to only be 3.8%. Spending in 2011 will increase by 12.7%, according to the BBC. It should be noted, however, that many analysts believe China’s defense spending is higher than the country reports.
1. USA
> Spending 2010: $698 Billion
> Change 2001 – 2010: 81.3%
> Share of GDP: 4.8%
The United States spent just under $700 billion on its military in 2010, more than all the other countries on this list combined. The amount of GDP which goes towards defense has also risen in the US from 3.1% in 2001 to an estimated 4.8% in 2010. This is the highest amount among countries with reliable military spending data outside of the Middle East. Even with the country’s large debt, military spending seems to be untouchable in the political realm. As the Stockholm International Peace Research Institute’s report says: “President Obama’s FY2012 budget
announced a 5-year freeze on non-security-related discretionary expenditure, but
military spending, along with other security spending such as intelligence and
Homeland Security is exempt.”
Douglas A. McIntyre & Charles B. Stockdale
Take This Retirement Quiz To Get Matched With A Financial Advisor (Sponsored)
Take the quiz below to get matched with a financial advisor today.
Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests.
Here’s how it works:
1. Answer SmartAsset advisor match quiz
2. Review your pre-screened matches at your leisure. Check out the
advisors’ profiles.
3. Speak with advisors at no cost to you. Have an introductory call on the phone or introduction in person and choose whom to work with in the future
Take the retirement quiz right here.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Editors' Picks
