OPINION | Peace beckons: Global military spending on the decline, says IMF study

By: |
Published: November 4, 2019 3:47:19 PM

Despite a fall in military expenditure as a percentage of GDP, defence spending in absolute terms rose 2.6% to $1.8 trillion in 2018.

SCO, Military Medicine Conference, India, Pakistan, TSENTR, military drill, Ex TSENTR 2019, Shanghai Corporation Organisation, defence news, Ministry of Defence, MoD, Indian Armed Force, indian army, defence newsDespite a fall in military expenditure as a percentage of GDP, defence spending in absolute terms rose 2.6% to .8 trillion in 2018.

There has been a significant drop in global military spending with both advanced and developing economies focusing more on social expenditure. Annual defence spending dropped from 3.6% of the GDP during the Cold War era (1970-90) to 1.9% in the current decade (2010-18) due to the improved global security environment, according to an IMF working paper. “Social spending has crowded out defence expenditure,” Sanjeev Gupta, former Deputy Director at THE IMF and one of the authors of the report, said at an event organised by EGROW Foundation, a Noida-based think-tank.

Despite a fall in military expenditure as a percentage of GDP, defence spending in absolute terms rose 2.6% to $1.8 trillion in 2018. The five biggest spenders — the United States, China, Saudi Arabia, India and France — accounted for around 60% of the total.

“Improved governance can lead to further reduction in military spending,” Gupta, currently a senior policy fellow at the Center for Global Development, a Washington DC-based think-tank, said.

Also read: To join or not to join: What is RCEP and should India be ‘RCEPised’?

Changes in fiscal priorities of the advanced economies after the global meltdown of 2009 is cited as a major reason for the fall in defence spending. Increased spending on health and education by developing economies to meet the Millennium Development Goals and Sustainable Development Goals set by the United Nations is another reason for the drop in military expenditure, says the IMF report titled ‘Is Military Spending Converging Across Countries? An Examination of Trends and Key Determinants’.

The United States accounted for $649 billion of the total military expenditure in 2018. The US defence outlay is only slightly less than the next eight highest spenders combined. China ($250 billion), Saudi Arabia (68 billion), India ($67 billion), France ($64 billion) and Russia ($61 billion) are the next five biggest spenders.

India raised its military budget by 3.1% to $67 billion in 2018, while Pakistan’s defence expenditure grew by 11% to $11.4 billion. Military spending in Asia and Oceania accounted for 28% of the global total at $507 billion last year.

West Asian countries continued to spend huge amounts of defence. The region has six of the 10 countries with the highest military expenditure — Saudi Arabia (8.8% of GDP), Oman (8.2%), Kuwait (5.1%), Lebanon (5%, Jordan (4.7%) and Israel (4.3%).

Do you know What is Expenditure Budget, Customs Duty, Reverse Repo Rate, Receipt Budget, Securities Transaction Tax? FE Knowledge Desk explains each of these and more in detail at Financial Express Explained. Also get Live BSE/NSE Stock Prices, latest NAV of Mutual Funds, Best equity funds, Top Gainers, Top Losers on Financial Express. Don’t forget to try our free Income Tax Calculator tool.

Next Stories
1UK accountants gloomiest in a decade on Brexit and slow growth
2Balancing act: Windfall to aid budget despite big tax deficit
3Revenue crunch: Govt mulls funds transfer from less important to key depts