BOFIT Viikkokatsaus / BOFIT Weekly Review 2021/17

The latest figures from the Stockholm International Peace Research Institute (SIPRI) show that the military spending of governments around the world continued to rise last year. Real global military expenditure rose by 2.6 % y-o-y and was up by about 9 % from a decade ago. In real terms, Russian military spending grew by 2.5 % and China’s spending by 1.9 %.

The biggest military spenders in the world are the US and China. The rapid growth of China’s economy and military spending lifted it to the number-two position in the early 2000s. The US share of global military spending has declined from about 50 % to under 40 %, while China’s share has risen from less than 5 % to over 10 %. SIPRI estimates that China’s defence spending last year amounted to USD 252 billion, or 13 % of global military spending. China’s military spending has grown roughly at the same pace as its GDP, and the ratio of defence spending to GDP over the last 20 years has been slightly less than 2 %. In 2020, the ratio was 1.7 %, which is well below the defence-spending-to-GDP ratios of all other large powers.

SIPRI estimates that Russia’s 2020 defence spending amounted to USD 62 billion, or 4.3 % of GDP in 2020. Russia’s military spending grew briskly up to 2016, but thereafter growth has been more modest. Russian military spending is more than double that of China in relative terms (both per GDP and population).

Russia last year had the world’s fourth highest defence spending after the United States, China and India. Russia’s share of global military spending was 3 % and India’s 4 %. Saudi Arabia’s defence spending over the past two years has declined substantially, which helped lift the UK into fifth place globally in military spending.

Russia’s military spending is relatively high given the size of its economy


Sources: SIPRI and BOFIT.

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