Military Expenditures

Figure 1. World Military Expenditures, 1961-1994

World Military Expenditures, 1961-1994 (42k)

* The logarithmic or ratio scale used in this and other figures is designed to facilitate comparisons of rates of change. A ratio scale is compressed as values increase so that, anywhere on the chart, equal vertical distances represent equal ratios of value and equal slopes represent equal rates of change.

The downward trend in world military spending continued in 1994 with a 5% drop to $840 billion, the lowest level since 1966 and 35% below the all-time peak of $1.3 trillion in 1987 (1994 dollars--Figure 1 and Main Table I).

The cumulative world reductions from 1987 to 1994 amounted to over $1.5 trillion dollars (comparing the peak year to each subsequent year). However, since the reduction in military spending occurred mainly in Eastern Europe ($1.25 trillion), where it was accompanied by a cumulative decline of $9.4 trillion in aggregate GNP, most of it cannot be considered "savings". The rest of the world excluding Eastern Europe amassed reductions of only $123 billion between the peak in 1986 and 1994.

Note: The "Developed" and "Developing" groups of countries have been modified by moving eight countries from the latter to the former and one country, the reverse. (See Statistical Notes, Coverage...)

Most of the cumulative reduction in military spending occurred in the developed group of countries, again primarily due to the sharp Soviet/Russian downturn as well as the less rapid but still large US decline.

Military spending in the developing countries as a group began to decline earlier, in 1983, a trend that has continued at a moderate rate since then with the exception of a "bulge" in 1990-1992 due to the Persian Gulf War (Figure 2). The group has spent about $300 billion less, cumulated over years since the 1983 peak, although the annual rate of decline has been 2.7% over the 1984-1994 period.

Regional Developments

The shares of world spending by region over the decade show a substantial rise for North America (from 27 to 36%), Western Europe (from 16 to 22%), and East Asia (from 10 to 17%), with a concomitant reduction mainly for Eastern Europe (from 35 to 14%) and the Middle East (from 8 to 5%) (Table 1).

Figure 2. World Military Expenditures, 1984-1994

World Military Expenditures, 1984-1994 (19k)

Eastern Europe averaged a steep 27% annual decline in the 1990-1994 period, as did the former Warsaw Pact countries, whose peak 1988 spending of over $450 billion dropped to (a roughly estimated) $112 billion in 1994, a 75% reduction.

Eastern Europe's decline was of course mainly in the Soviet Union and its successor states, which together in the 1990-1994 period fell nearly 70% overall and 28% per year.

Military spending in other regions moved in various directions in the 1990-1994 period (see Table 1, Figure 3, and the box on the following page).

Table 1
Military Expenditures: Shares and Growth

(In percent)
World Share
Real Growth Rate*
84- 94
2nd Half

North America27.135.7-1.7-3.1
Western Europe16.022.2-.6-2.6
East Asia9.717.21.72.1
Eastern Europe34.913.6-13.2-27.2
Middle East8.05.4-4.9-18.0
South America1.61.9-1.9-2.4
South Asia.
North Africa.8.5-7.3-5.6
Subsaharan Africa.3.4.8-6.3
Central Asia & Cauc.---.2------
Central America & Car..3.1-11.7-21.8
Europe, all50.1 35.7-7.8 -16.0
Africa, all1.5 1.3-3.8 -7.6
Organization / Reference Group
OECD46.2 64.4-.9 -2.4
OPEC6.3 4.1-4.9 -20.6
NATO, all41.7 55.9-1.3 -3.0
Warsaw Pact (fmr)34.4 13.3-13.2 -27.3
NATO Europe14.8 20.4-.6 -2.7
Latin America2.0 2.3-2.8 -3.2
CIS--- 11.8--- ---

* Average annual rate, calculated as a compound rate curve fitted to all points (see Statistical Notes for details).

Regions ranked by average annual rates of change in military spending, 1990-1994:

Eastern Europe                  -27.2%

Central America & Caribbean     -21.8

Middle East                     -18.0

Subsaharan Africa               -6.3

North Africa                    -5.6

North America                   -3.1

Western Europe                  -2.6

South America                   -2.4

East Asia                       +2.1

South Asia                      +2.6

Oceania                         +4.9
The US reduced its spending by 3.2% annually since 1990, although it still accounted for 36% of the world total in 1994.

Western Europe as a whole declined a little over 2.5% annually since 1990, as did NATO Europe. All NATO now accounts for 56% of world military spending.

East Asia, now the third largest spending region, showed a 2.5% growth rate in 1990-1994. Very rough estimates of military spending in China (Mainland) make it the third largest spender in the world (following the United States and Russia), and Japan is fourth. Of the 11 East Asian countries whose 1994 military spending exceeded $1 billion, 10 had positive annual growth rates in the 1990-1994 period (North Korea being the only one in decline), of which three had rates over 10% (Thailand, Burma, and Malaysia) and three had rates of 5 to 10% (Singapore, Indonesia, and China-Taiwan). The lower growth rates of Mainland China (.7%) and Japan (1.8%) restrain the regional average, in view of their large size.

The decline in the Middle East reflects the passing of the Gulf War bulge. Notable annual rates of decline were posted in 1990-1994 by most of the largest spenders: Saudi Arabia (largest--13%), Syria (20%), Kuwait (37%), Iran (18%) and Iraq (38%--both very roughly estimated), and the United Arab Emirates (16%). Israel (2nd largest) declined slightly, while positive growth rates were shown by Yemen (6%) and Egypt (3%).

The 5% growth rate experienced by Oceania in the period was attributable to Australia's 6% rate, as all others in the region declined.

A ranking of the top twenty military spenders in 1994 (Figure 4, following page), in comparison with a similar ranking for 1993 in the previous edition of this report, shows that Japan has risen to fourth place (after the US, Russia, and China) and Australia has replaced India in 13th place.

Figure 3. Military Expenditures by Region,

Military Expenditures by Region, 1984-1994 (28k)

Figure 4. Leading Military Spenders and Armed Forces, 1994

Leading Military Spenders and Armed Forces, 1994 (43k)

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