More problems. More money. That is a key takeaway from the latest data published today by the Stockholm International Peace Research Institute (SIPRI), a leading global security think tank.
For 2022, researchers recorded a year-on-year jump of 3.7% in worldwide military expenditure. That marks an all-time high and follows several years of continuously higher spending.
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“Irrespective of whether economies are doing better or worse than expected, the military is taking up more financial resources than in previous years, or previously ever in history,” Nan Tian, a senior researcher at SIPRI who helped author the report, told DW.
For those who follow world events, the doubling down on defense likely comes as no surprise. Russia’s all-out war against Ukraine has particularly led European countries to pay their military budgets renewed attention. Ever since the first Russian missiles struck Ukrainian cities in February 2022, country after country has announced new spending.
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Spending as a safety blanket
Defense outlays among NATO members — the Euro-Atlantic military alliance incorporating most European countries — have been going up since at least 2014. That is when Russia initially attacked Ukraine, illegally annexing the Crimean Peninsula and backing separatists in the eastern part of the country. NATO members agreed to meet a defense spending goal of 2% of national GDP by 2024, and many of them have been slowly working toward that target.
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The Russian threat that all this money is meant to counter, however, has not materialized as frightfully as first imagined. The fact that Ukraine has so far managed to counter the Russian forces, which are theoretically superior, and hem them into a corner of the country, casts serious doubt on a broader danger to the rest of Europe.
Still, money for new military kit, and other defense-related spending, keeps pouring in. Russia may be a flop on the battlefield, Nan Tian said, but it could still be a potent adversary in cyberspace. Infiltration of and attacks on digital infrastructure can be low-cost, but high-damage.
And, of course, Russia maintains a considerable nuclear arsenal.
“I think for a lot of European countries, it’s really about how to beef up all aspects of defense,” he said. “The higher military spending is a sign of deterrence to Russia.”
What the numbers mean
A chicken-or-egg scenario has taken shape. As governments respond to a growing sense of unraveling security, they contribute to its further deterioration. At the same time, however, the SIPRI data shows that the spending spree may not be as pronounced as headlines and policymakers sometimes make it out to be.
While actual spending is up, topping a combined $2.2 trillion (€2 trillion) in 2022, as a share of GDP it is 0.1% lower than it was in 2013. That is despite double-digit increases over the past decade across many countries, including nuclear powers and those known for prioritizing armed forces, such as China (63%), India (47%), and Israel (26%).
In each of these countries, however, defense spending has declined as a percentage of national economic output.
The discrepancy suggests economic expansion has outpaced national budgets in areas such as defense, even if dollar figures can appear eye-popping; and rapid, record inflation has forced governments to spend more just to keep up.
In other words, they have lost purchasing power. A defense ministry faces similar price pressures when shopping for a squadron of fighter jets that a normal household does for buying a carton of eggs. Countries looking not just to maintain, but grow or upgrade their militaries, have to spend even more, which SIPRI’s reporting reflects.
“Despite countries having increased spending by 15%, in nominal terms, once you adjust for inflation, they actually decrease,” Nan Tian said, giving a ballpark example.
Inflation has also been a political problem, particularly in Germany, which early last year pledged an additional €100 billion for its armed forces in response to Russian aggression. After years of facing criticism for not spending enough, higher prices have muted its efforts to finally do so.
Not just bombs and bullets
The additional sum, which comes on top of Germany’s regular defense budget, is not reflected in the SIPRI data because none of it was ready to be spent last year. Even when the funds do start flowing, Germany may still fall short of NATO’s goals, according to an analysis by the German Economic Institute at the end of last year.
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Earmarked for a five-year period, it’s a chunk of change intended to buy Germany new weapons and other equipment. The SIPRI figures, however, cover broader ground.
National defense establishments are sprawling institutions, employing hundreds of thousands of civilian and military personnel, sometimes in far-flung and hostile regions, at great cost. These employees need to be fed and clothed, and have an administration to manage them.
More spending, therefore, does not necessarily translate into more weapons and upgraded fighting forces. Although the arms industry is booming and under pressure to keep up with demand, defense ministries are also paying to keep the lights on and toilets clean, like in any office.
The year-on-year increase also accounts for military aid, which has seen an exceptional increase due to Russia’s war in Ukraine. The United States alone has contributed more than $47 billion to Ukraine’s defense, according to the Kiel Institute, a German economic think tank.
The portion of spending that does go directly to weapons varies by country, and it can be difficult to assess how effectively it is invested. That’s because there is a “lag effect,” SIPRI researcher Nan Tian explained.
Weapon systems are large and complex and can take years to develop, procure, and press into service. Many of the aircraft, missile batteries, and armored vehicles considered top-of-the-line that Ukraine has pushed to receive from NATO members are decades old. Some of the latest spending, SIPRI notes, is going towards modernizing nuclear forces that most hope are never used.
How much bang taxpayers get for their buck spent on defense is always a question when such huge sums of money are at play. That is especially the case for the US, which is by far the leader in military output. In 2022, the official US defense budget came in at $877 billion (€790 billion), according to the report. That accounts for 39% of global military expenditures.
Taken as a percentage of national GDP, this defense spending may be less than it was in 2013 and a far cry from Cold War highs of nearly 10%, but no matter how you crunch the numbers, Nan Tian said it still enabled the US to project power and “spread that influence to the rest of the world.”
China, which the US says is a major reason for increases to the defense budget, is a distant second, putting out $292 billion (€263 billion) last year. Despite the disparity between the world’s two largest economies, many US officials and security analysts are warning of China gaining a military edge.
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The extent to which that is true may have to do with where that money is spent. Whereas China is flexing its military muscle in its Pacific neighborhood, the US seems intent on maintaining a security footprint around the world — a position it has held since the Second World War.
Russian military spending grew by an estimated 9.2 per cent in 2022, to around $86.4 billion. This was equivalent to 4.1 per cent of Russia's gross domestic product (GDP) in 2022, up from 3.7 per cent of GDP in 2021.Does increased military spending lead to slower economic growth? ›
Over a 20-year period, a 1% increase in military spending will decrease a country's economic growth by 9%.How will an increase in military spending affect an economy? ›
The economic cost of defense spending shows up in the national debt and in a dislocation of potential jobs from the private sector to the public. There is an economic distortion of any industry that the military relies on as resources are diverted to produce better fighter planes and weapons.What is the world military expenditures and arms transfers? ›
The “World Military Expenditures and Arms Transfers” (WMEAT) series of publications is designed to be a convenient reference on annual military expenditures, arms transfers, armed forces, selected economic data, and relative indicators consisting of pertinent military-economic ratios.Who is the largest military spender sipri? ›
The three largest spenders in 2022—the United States, China and Russia—accounted for 56 per cent of the world total, according to new data on global military spending published today by the Stockholm International Peace Research Institute (SIPRI).How much does Russia spend on military vs USA? ›
Countries with the highest military spending worldwide in 2021 (in billion U.S. dollars)
|Characteristic||Military spending in billion U.S. dollars|
U.S. defense spending increased by $71 billion from 2021 to 2022, in part due to a military aid sent to support Ukraine in its ongoing conflict, and the United States now spends more on defense than the next 10 countries combined (up from outspending the next 9 countries combined in 2021).Does military spending stimulate economic growth? ›
Defense spending generates jobs directly and can improve economic output indirectly through the spillover of technology and human capital to the civilian economy. However, defense spending also has opportunity costs because it diverts resources from government programs that might do more to promote growth.What is the increase in military spending? ›
On March 9, 2023, the Biden-Harris Administration submitted to Congress a proposed Fiscal Year (FY) 2024 Budget request of $842 billion for the Department of Defense (DoD), an increase of $26 billion over FY 2023 levels and $100 billion more than FY 2022.What are the benefits of high military spending? ›
- Value Added by Defense Industries. People who advocate setting up of defense industries locally state that it will also be economically beneficial. ...
- Peace Aids Trade and Commerce. Peace is important to maintain fruitful trade relations in a given region.
Those goals can be achieved in a number of ways, primarily through four elements of national power: diplomatic actions, such as building coalitions; information campaigns to influence world opinion; military actions to deter and counter aggression; and economic actions, such as opening trade or imposing sanctions.How much of the US economy depends on military? ›
The statistic represents the U.S. defense outlays from 2000 to 2021 with an additional forecast from 2022 to 2032, as a percentage of the gross domestic product. Defense outlays amounted to 742 billion U.S. dollars in 2021, which was about 3.3 percent of the U.S. GDP.What is the US share of global military spending? ›
The United States was the top nation in terms of military expenditure, spending $801 billion to make up almost 38% of global military spending in 2021. America has been the top military spending nation since SIPRI began tracking in 1949, making up more than 30% of the world's military spending for the last two decades.What country spends the most for military? ›
The U.S. had by far the largest military budget at $767.8 billion in 2021, but China's outlay was also quite large at $270 billion. In comparison, the other four nations had more modest outlays, ranging from Saudi Arabia's $53.8 billion to India's $73.6 billion.How much taxpayer money goes to the US military? ›
Approximately 20 percent of the federal budget is spent on defense and security.Who has the best funded military? ›
The United States has the highest military spending of any nation. Its military spending includes all of the Department of Defense's regular activities, war spending, the nuclear weapon program, international military assistance, and other Pentagon-related spending.Who has the most strategic military in the world? ›
United States. The United States of America is a North American nation that is the world's most dominant economic and military power.Who spends the most on Defence in NATO? ›
NATO countries meeting the guideline to spend 2% of GDP on defence. These countries are Greece, the USA, the UK, Poland, Latvia, Estonia and Croatia. The UK remains the 2nd largest spender in NATO , after the USA. UK expenditure on defence as a percentage of national GDP in 2021.Who is stronger China or USA? ›
United States remains the most powerful country in Asia as China's influence declines, study shows.Is Russia more powerful than NATO? ›
The combined total of Nato military personnel currently exceeds 5.4 million – around four times as many as Russia, according to Statista. It has about five times as many aircraft, four times as many armoured vehicles and three times as many military ships.
Comparison of the military capabilities of NATO and Russia 2023. As of 2023, NATO had approximately 3.36 million active military personnel compared with 1.33 million active military personnel in the Russian military.What is the big increase in the US military budget 2023? ›
President Joe Biden's national defense budget request comes in at $886.3 billion, with $842 billion to DOD alone. This is a $26 billion increase over the fiscal 2023 enacted budget.Does the US spend more on military or healthcare? ›
United States is ranked 1 of 145 out of the countries considered for the annual Global Firepower review. The nation holds a Power Index score of 0.0712 with a score of 0.0000 being considered exceptional in the GFP assessment. This country is a Top 5 world power according to the GFP index formula.Does war help or hurt the economy? ›
Putting aside the very real human cost, war has also serious economic costs – damage to infrastructure, a decline in the working population, inflation, shortages, uncertainty, a rise in debt and disruption to normal economic activity.Does war save economies? ›
War is often used as a last ditch effort to prevent deteriorating economic conditions or currency crises, particularly by expanding services and employment in the military, and by simultaneously depopulating segments of the population to free up resources and restore the economic and social order.Do military bases help the economy? ›
The DoD contributes billions of dollars each year to state economies through the operation of military installations. This spending helps sustain local communities by creating employment opportunities across a wide range of sectors, both directly and indirectly.What does the US spend the most money on? ›
Federal government spending pays for everything from Social Security and Medicare to military equipment, highway maintenance, education, and more. In 2022, the federal government spent the most on Social Security.Why is the US military so powerful? ›
The U.S. Armed Forces has significant capabilities in both defense and power projection due to its large budget, resulting in advanced and powerful technologies which enables a widespread deployment of the force around the world, including around 800 military bases outside the United States.What are 3 advantages of the military? ›
Intangible qualities like leadership, comraderie, discipline and determination are perhaps the most rewarding of all military benefits. Still, it's nice to know that service in the Military comes with tangible benefits too, including education, medical/dental care, 30 days of paid vacation, travel discounts and more.
In 1989, former Defense Secretary Robert McNamara suggested that a 50 percent cut in Pentagon funding over five years would “enhance global stability, strengthen [U.S.] security and, at the same time, produce the resources to support a much-needed restructuring of the economy.” Today, with a more modest—but global—2 ...How important is military budget? ›
It is critical because in defense, dollars are policy. The country cannot provide for its security in a cost-effective manner unless it funds the right amount of personnel and weapons to implement its National Security Strategy.Does military spending cause inflation? ›
First, an increase in defense spending might increase inflation from the demand side. According to both the classical and Keynesian models, inflation occurs when the aggregate demand exceeds the aggregate supply (Abel et al., 2014).Is military spending over time? ›
U.S. Military Spending/Defense Budget 1960-2023.
|U.S. Military Spending/Defense Budget - Historical Data|
|Year||Billions of US $||% of GDP|
China's defense budget grew by 7.1% last year to 1.45 trillion yuan, faster than the 6.8% increase in 2021 and 6.6% climb in 2020, according to official data. In 2019, China's defense spending rose by 7.5% to 1.19 trillion yuan.Is the US military spending the highest in the world? ›
Global military spending hit a new record high last year, with the United States accounting for 39% of the global total, according to a new report. Spending on the world's armed forces soared for the eighth consecutive year in 2022, reaching an astonishing new high of $2.24 trillion.How much of the US economy is weapons? ›
Not only does the manufacture and sale of firearms and hunting supplies create good jobs in the United States, but the industry also contributes to the economy as a whole. In fact, in 2022 the firearm and ammunition industry was responsible for as much as $80.73 billion in total economic activity in the country.How big is the US military compared to China? ›
China wields by far the world's largest military, with 2.8 million soldiers, sailors and airmen—twice the American number. (The United States is number two; the only other countries with more than a million active duty troops are China's neighbors—Russia, India and North Korea.)Is the US military spending more than the rest of the world combined? ›
The United States still makes up the lion's share, with its $801 billion in 2021 representing 39% of the world's military spending. That's more than the next nine countries combined — still more than 3 years ago when it was merely larger than the next seven combined.Which country has the lowest military budget? ›
Military spending, percent of GDP, 2021 - Country rankings:
The average for 2021 based on 145 countries was 1.87 percent. The highest value was in Oman: 7.34 percent and the lowest value was in Zimbabwe: 0.01 percent. The indicator is available from 1960 to 2021.
Key Facts. Budget 2022: A total $8 billion new funding over five years—on top of planned increases associated with Strong, Secure, Engaged, including: $6.1 billion for continental defence, commitments to our allies, investments in equipment. $100.5 million for modernizing the military justice system and culture change.Which state has the best military in the world? ›
Best States For a Military
In fact, our research shows that Alaska is the best state for militaries in America. The best city in America for militaries with the highest pay is Santa Clara, CA.
China has the world's largest standing army and navy, with Beijing announcing on Sunday the biggest increase to its military budget since 2019.What percent of U.S. budget is Social Security and Medicare? ›
In 2022, major entitlement programs—Social Security, Medicare, Medicaid, Obamacare, and other health care programs—consumed 46 percent of all federal spending. Soon, this spending will be larger than the portion of spending for all other priorities (such as national defense) combined.Where do most tax dollars go? ›
Like most governments, California relies primarily on taxes to fund the public services that it provides to its individuals and businesses. California's state and local governments raise well over $200 billion annually in own-source revenues to provide public services, with roughly 60 percent of this from taxes.Do soldiers pay tax in USA? ›
Serving your country by enlisting in the United States military is extremely honorable, but it doesn't change your tax obligations. Whether you're stationed in the United States or are living abroad as a member of the United States military, you'll still have to pay taxes.Do US troops pay taxes? ›
While all pays are taxable, most allowances are tax-exempt. The primary allowances for most individuals are BAS and BAH, which are tax-exempt. Conus COLA is one allowance that is taxable.How much money does Russia spend on their military? ›
Russia's official 2022 military budget is expected to be 4.7 trillion rubles ($75bn), or higher, and about $84bn for 2023, 40% more than initial military budget announced in 2021. Between 2022–2025, Russia plans to spend in total $600bn on defence and security.What rank is Russia in military spending? ›
With an annual defense budget of over 800 billion U.S. dollars, the United States accounted for more than one third of the global expenditure in that year. To compare, Russia ranked fifth by military spending.How much does Russia spend on nukes in military? ›
In 2021, the United States spent approximately 44 billion U.S. dollars on nuclear weapons, the highest of any country in the world. China spent the second-highest amount, at nearly 12 billion dollars, while Russia spent the third most at nearly nine billion dollars.
In 2022, the United States spent an estimated 822 billion U.S. dollars on defense. This makes their defense budget, by far, the biggest out of all the NATO members. The United Kingdom was the country with the second highest defense expenditure with 68 billion U.S Dollars, with Germany following in third.How much is the US military worth? ›
Budget for FY2021
For Fiscal Year 2021 (FY2021), the Department of Defense's discretionary budget authority was approximately $705.39 billion ($705,390,000,000).
The Chinese government announces defense expenditure information annually. In March 2023, China announced a yearly defense budget of RMB 1.55 trillion ($224.8 billion), 1 marking a nominal 7.2 percent increase from the 2022 budget of RMB 1.45 trillion ($229.6 billion).Who has the strongest military in the world? ›
1. United States Of America. US Military has the biggest defence budget in the world. They are known for their most powerful Air Force on the planet, named as United States Air Force (USAF).Who has the biggest nuke supply? ›
- Russia (5,977 warheads)
- United States (5,428)
- China (350)
- France (290)
- United Kingdom (225)
- Pakistan (165)
- India (160)
- Israel (90)
It would take a land- based missile about 30 minutes to fly between Russia and the United States; a submarine-based missile could strike in as little as 10 to 15 minutes after launch.Who has more nukes China or the USA? ›
The United States has 800 launchers for strategic nuclear weapons and a stockpile of 3,700 warheads (see graph below). Even if China increases it nuclear weapons stockpile to 1,500 by 2035, it will only make up a fraction of the much larger US and Russian stockpiles.Who has the best funded military in the world? ›
The United States has the highest military spending of any nation. Its military spending includes all of the Department of Defense's regular activities, war spending, the nuclear weapon program, international military assistance, and other Pentagon-related spending.Who is the biggest donor to NATO? ›
|Country||Adjusted cost-share further to accession of North Macedonia "at 30"1|
Comparison of the military capabilities of NATO and Russia as of 2023.
|Fighters / interceptors||3,398||773|