Worldwide Military Expenditures Continue to Fall, but at Slower Pace

• Author: Sanjeev Gupta/Benedict Clements/Edgardo Ruggiero
• Position: IMF Fiscal Affairs Department
• Pages: 119-120

Page 119

Worldwide military expenditure has continued to fall, but at a much slower pace than reported a year earlier (see IMF Survey, June 3, 1996), according to a recent IMF staff analysis of data for 132 countries from the World Economic Outlook database for 1996, combined with revised data for earlier years. The earlier study reported a fall in worldwide military spending of 1.3 percentage points of GDP between 1990 and 1995, reflecting widespread reductions across all regions. The revised data show that worldwide military outlays fell to 2.4 percent of GDP in 1995 and 2.3 percent in 1996 from 3.5 percent in 1990 (see Table 1).

Data from other sources confirm this slowing in the pace of military spending reductions (differences in the figures reflect varying coverage of military spending and number of countries). For example, data from the Stockholm International Peace Research Institute (SIPRI)-whose coverage varies by year from 63 to 117 countries and includes up to 15 transition economies (see Table 2)-show a decline in worldwide spending to 2.5 percent of GDP in 1994 and 2.3 percent in 1995 from 4.2 percent in 1990, compared with the results reported in 1996-2.7 percent in 1994 from 4.2 percent in 1990 (see IMF Survey, June 3, 1996, page 181). SIPRI data show a similar result for 59 countries for which data were available for every year between 1990 and 1995.

Data collected by the London-based International Institute for Strategic Studies (IISS) also provide support for the decline in military spending in 1996. IISS data show that budgeted military spending for 1996 was lower than actual spending in 1995 by some 0.6 percent of GDP (see Table 3). These figures should be interpreted with caution,however, since actual spending can deviate from what is projected in the budget.

[ GRAPHICS ARE NOT INCLUDED ]

Based on the IMF's World Economic Outlook database, global resource savings-that is, the peace dividend-amounted to $324 billion between 1990 and 1995. The peace dividend is defined as the difference between the dollar amount that would have been spent in...