Worldwide Military Expenditures Appear to Have Leveled Off

• Author: Sanjeev Gupta/Calvin McDonald/Edgardo Ruggiero
• Position: IMF Fiscal Affairs Department
• Pages: 149-150

Page 149

Worldwide military spending has virtually leveled off since 1995, according to an IMF staff analysis of 132 countries from the World Economic Outlook database (see chart, top, this page). This is consistent with trends reported previously (see IMF Survey, June 3,1996, and April 21, 1997). Worldwide military expenditures declined to 2.3 percent of GDP in 1996 and 1997 from 3.5 percent of GDP in 1990-freeing some $357 billion in resources over 1990-97. These freed resources- indicative of a peace dividend-represent the difference between the dollar amount that would have been spent in 1997 if the 1990 ratio of military expenditures to GDP had been maintained and the actual outlays for 1997. The absolute resource savings stemming from declines in worldwide military spending has slowed to $18 billion during 1995-97, compared with almost $100 billion in the period from 1990 to 1995.

Differences in coverage in military spending data are notoriously hard to capture completely and make direct comparisons of data difficult. But data from other sources (see chart, bottom, this page) do confirm the trend observed in IMF data. For example, both the Stockholm International Peace Research Institute (SIPRI)-whose data cover 124 countries-and the London-based International Institute of Strategic Studies (IISS)-whose data include 90 countries-find that worldwide military spending fell by around 0.1 percent of GDP in 1996 from around 2.5 percent of GDP in 1995. The U.S. Arms Control and Disarmament Agency data indicate that military spending for 102 countries declined by slightly less than 0.3 percent of GDP to 2.7 percent in 1995-the last year for which such data are available.

Based on the IMF's World Economic Outlook database, military spending fell by less than 0.1 percent of GDP each year in 1996 and 1997 (see table, bottom, page 150). Among the developing countries, two regions (Africa and the Middle East-including Cyprus, Malta, and Turkey) experienced a somewhat greater decline in military expenditures in relation to GDP over this two-year period (0.5 percent and 0.3 percent, respectively). However, military spending in the Middle East remains the highest of any region, at 6.1 percent of GDP. Africa is estimated to have reduced nominal military expenditures by $1.2 billion over 1996 and 1997, even though developing countries taken together...