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The economic planet | Growing military budgets



The world as we know it changed in the space of a week with Russia’s invasion of Ukraine. The period of relative world peace, which has lasted since the end of the Second World War and which has fueled economic prosperity, is drawing to a close. To see the evolution of military spending in the world, there is cause for concern for the future.

Total military spending worldwide follows a long upward curve. Even the pandemic has not bent this curve, the International Institute for Strategic Studies recently indicated. Global military spending increased by 3.9% in 2020, compared to 2019.

Relative to the size of the global economy, however, military budgets have fallen since the 1960s. The share of military spending in global GDP, which was 6.1% in 1967, had fallen to around 2% in 2018 .

This slow decline appears to be over, according to World Bank data. Since 2018, the share of military spending relative to the size of the economy has started to rise again. Unsurprisingly, it is the United States that spends the most on armaments. The country alone is responsible for 40% of total military spending worldwide. It is followed by China and India.

Comparing the share of military spending against the size of the economy gives a better idea of ​​each country’s war effort. In the United States, military expenditure represents 3.7% of the domestic product (GDP). It is even more for Russia, whose military budget accounts for 4.3% of the economy. Ukraine, which is currently defending itself from the Russian invasion, has increased its military spending since 2014, and it accounts for 4.1% of its economy.

On this scale, the oil monarchies are champions. Protecting treasure buried underground is expensive. Saudi Arabia, for example, devotes more than 8% of its GDP to armaments and Kuwait, 6.5%.

The 2% Club

The 29 member countries of NATO, which are currently on hot coals because of the threats hanging over Europe, must devote a minimum of 2% of their GDP to their defense force.

Not all do. Canada, for example, is at 1.4%, which does not put it far from the bottom of the list. In fact, less than half of NATO countries comply with the rule, and some have only recently decided to do so.

The hegemonic ambitions of the Russian president do not date from yesterday or last week. This is probably what has led several European countries to reconsider their military spending. In 2020, France, Norway and Slovakia joined the countries that devote at least 2% of their GDP to their military budget.

Germany, the largest economy in Europe, which is below the 2% rule and which has always been reluctant to increase its military spending, has just begun a complete change of course. German Chancellor Olof Scholz announced a few days ago “a massive increase in spending by the Bundeswerh [l’armée allemande] which will bring the total above the 2% threshold.

We haven’t seen anything yet. We can expect a sharp increase in military budgets around the world. Even Canada could follow suit, it which shares a border with the Russians in the Arctic, and which begins to worry about it.

“It’s the beginning of a new era,” pleaded the German Chancellor, whose remarks were reported in all the media on the planet.

The world has changed, but some things don’t change. “If you want peace, prepare for war”, it has been believed since Roman times. It seems that it is still circumstantial.

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  • 1830 billion US
    Total global military spending in 2020


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