{
  "title": "Military Spending in the Post-Pandemic Era",
  "sourceUrl": "https://www.imf.org/en/publications/fandd/issues/2021/06/military-spending-in-the-post-pandemic-era-clements-gupta-khamidova",
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  "summary": "Post COVID-19, countries’ efforts to secure a more peaceful world could have a positive economic effect, write Benedict Clements, Sanjeev Gupta, and Saida Khamidova.",
  "sections": [
    {
      "heading": "Executive summary",
      "content": "- Military spending absorbed on average about 6½ percent of government budgets across the world in 2019, according to data from the Stockholm International Peace Research Institute.\n- Worldwide military spending (unweighted country averages) declined from 3.6 percent of GDP during the Cold War period (1970–90) to 1.9 percent of GDP in 2010–19.\n- Since the end of the Cold War in 1990, defense outlays have declined both as a share of government spending and of GDP, making room for spending on education, health, and infrastructure.\n- The COVID-19 pandemic and accompanying budget support raised the average debt-to-GDP ratio by another 16 percentage points (IMF 2021), adding pressure for fiscal consolidation as pre-pandemic growth resumes."
    },
    {
      "heading": "Trends and drivers of military spending",
      "content": "- Decline in military spending reflects multiple factors:\n  - End of the Cold War and reduced international tensions.\n  - Fiscal consolidation pressure in advanced economies, with average debt-to-GDP exceeding 100 percent in the period following the financial crisis.\n  - Developing economies shifting budget shares to education, health, and infrastructure since the early 2000s.\n  - Focus on achieving the United Nations Sustainable Development Goals, requiring major increases in human capital spending.\n  - Rapidly aging populations in advanced economies increasing age-related spending pressures (Clements and others 2018).\n- Heterogeneity across countries:\n  - 83 countries spend less than 2 percent of GDP on defense.\n  - 48 countries spend between 2 and 5 percent of GDP on defense.\n  - 7 countries spend more than 5 percent of GDP on defense.\n  - Several advanced economies are among the top 15 military spenders and account for more than 80 percent of military spending worldwide."
    },
    {
      "heading": "Convergence analysis and country groupings",
      "content": "- Military spending relative to GDP is not converging to a single global level across 138 countries; instead, it follows three distinct paths (Clements, Gupta, and Khamidova 2021):\n  - Group 1 (20 countries): High-conflict countries where military spending has risen substantially and diverged from the global trend. This group accounts for 5 percent of global military expenditure and includes Armenia, Azerbaijan, the Democratic Republic of the Congo, Oman, and Saudi Arabia.\n  - Group 2 (77 countries, including 30 advanced economies): The largest group, accounting for more than 90 percent of global military spending, with outlays plateauing at about 2–2½ percent of GDP. This group includes China, India, Russia, the United Kingdom, and the United States; all are among the top 15 military spenders in absolute terms.\n  - Group 3 (41 countries): Spending converges at slightly less than 1 percent of GDP. Only 2 countries in this group are advanced economies—Lithuania and Slovenia."
    },
    {
      "heading": "Determinants of group membership and spending levels",
      "content": "- Factors increasing likelihood of higher military spending and membership in high-spending group(s):\n  - High military spending by neighbors (perceived threat).\n  - Significant political instability, violence, and terrorism within a country’s territory.\n- Factors associated with lower military spending and membership in low-spending groups (groups 2 and 3):\n  - Political stability and little risk of violence or terrorism.\n  - High social spending.\n  - Low military spending by neighbors.\n- Membership in military alliances (such as NATO) does not have a discernible effect on military spending according to the analysis.\n- The competition for limited budget resources is influenced by a country’s capacity to raise taxes; developing economies with potential to raise more taxes may face less fierce competition for resources than advanced economies."
    },
    {
      "heading": "Implications for the post-COVID era and policy considerations",
      "content": "- For group 1 (conflict-driven spenders): Conflict has driven increases to a substantially higher 5 percent of GDP, implying that reducing internal and external conflicts could lower military spending and benefit economic growth and government budgets.\n- For group 3 (primarily developing economies): Spending has fallen to relatively low levels (slightly less than 1 percent of GDP), reflecting limited security pressures or policy choices emphasizing other spending priorities.\n- For group 2 (largest group, plateau at about 2–2½ percent of GDP): Two countervailing forces will shape future military spending:\n  - Downward pressure from fiscal consolidation needs and the priority to maintain social spending.\n  - Potential upward pressure if global tensions rise, as defense spending has recently plateaued rather than continuing to decline.\n- Policy takeaway: Efforts to secure a more peaceful world by reducing internal and external conflicts carry positive economic side effects—reducing military spending pressures, supporting growth, and easing demands on government budgets.\n\nIMF F&D. \"Military Spending in the Post-Pandemic Era.\" June 2021. Benedict Clements, Sanjeev Gupta, Saida Khamidova.\n\n---\n\n Content in this bundle\n\n- الإنفاق العسكري في حقبة ما بعد الجائحة\n  - الإنفاق العسكري في حقبة ما بعد الجائحة (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - الإنفاق العسكري في حقبة ما بعد الجائحة (PDF){rel=\"external\" type=\"application/pdf\"}\n- 后疫情时代的军费开支 - 金融与发展 - 国际货币基金组织季刊 -2021年6月号·第58卷\n  - 后疫情时代的军费开支 - 金融与发展 - 国际货币基金组织季刊 -2021年6月号·第58卷 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - 后疫情时代的军费开支 - 金融与发展 - 国际货币基金组织季刊 -2021年6月号·第58卷 (PDF){rel=\"external\" type=\"application/pdf\"}\n- El gasto militar en la era pospandemia ● Finanzas y Desarrollo ● Junio de 2021\n  - El gasto militar en la era pospandemia ● Finanzas y Desarrollo ● Junio de 2021 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - El gasto militar en la era pospandemia ● Finanzas y Desarrollo ● Junio de 2021 (PDF){rel=\"external\" type=\"application/pdf\"}\n- Dépenses militaires à l’ère post-pandémique\n  - Dépenses militaires à l’ère post-pandémique (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Dépenses militaires à l’ère post-pandémique (PDF){rel=\"external\" type=\"application/pdf\"}\n- Military Spending in the Post-Pandemic Era – IMF F&D\n  - Military Spending in the Post-Pandemic Era – IMF F&D (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Military Spending in the Post-Pandemic Era – IMF F&D (PDF){rel=\"external\" type=\"application/pdf\"}\n- Военные расходы в эпоху после пандемии\n  - Военные расходы в эпоху после пандемии (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Военные расходы в эпоху после пандемии (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/fandd/issues/2021/06/military-spending-in-the-post-pandemic-era-clements-gupta-khamidova"
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    "Authors: BENEDICT CLEMENTS, SANJEEV GUPTA, SAIDA KHAMIDOVA",
    "Published: June 1, 2021",
    "Military spending absorbed on average about 6½ percent of government budgets across the world in 2019, according to data from the Stockholm International Peace Research Institute.",
    "Worldwide military spending (unweighted country averages) declined from 3.6 percent of GDP during the Cold War period (1970–90) to 1.9 percent of GDP in 2010–19.",
    "Since the end of the Cold War in 1990, defense outlays have declined both as a share of government spending and of GDP, making room for spending on education, health, and infrastructure.",
    "The COVID-19 pandemic and accompanying budget support raised the average debt-to-GDP ratio by another 16 percentage points (IMF 2021), adding pressure for fiscal consolidation as pre-pandemic growth resumes.",
    "Decline in military spending reflects multiple factors:",
    "Heterogeneity across countries:",
    "Military spending relative to GDP is not converging to a single global level across 138 countries; instead, it follows three distinct paths (Clements, Gupta, and Khamidova 2021):",
    "Factors increasing likelihood of higher military spending and membership in high-spending group(s):",
    "Factors associated with lower military spending and membership in low-spending groups (groups 2 and 3):",
    "Membership in military alliances (such as NATO) does not have a discernible effect on military spending according to the analysis.",
    "The competition for limited budget resources is influenced by a country’s capacity to raise taxes; developing economies with potential to raise more taxes may face less fierce competition for resources than advanced economies.",
    "For group 1 (conflict-driven spenders): Conflict has driven increases to a substantially higher 5 percent of GDP, implying that reducing internal and external conflicts could lower military spending and benefit economic growth and government budgets.",
    "For group 3 (primarily developing economies): Spending has fallen to relatively low levels (slightly less than 1 percent of GDP), reflecting limited security pressures or policy choices emphasizing other spending priorities.",
    "For group 2 (largest group, plateau at about 2–2½ percent of GDP): Two countervailing forces will shape future military spending:",
    "Policy takeaway: Efforts to secure a more peaceful world by reducing internal and external conflicts carry positive economic side effects—reducing military spending pressures, supporting growth, and easing demands on government budgets.",
    "**الإنفاق العسكري في حقبة ما بعد الجائحة**",
    "**后疫情时代的军费开支 - 金融与发展 - 国际货币基金组织季刊 -2021年6月号·第58卷**",
    "**El gasto militar en la era pospandemia ● Finanzas y Desarrollo ● Junio de 2021**",
    "**Dépenses militaires à l’ère post-pandémique**",
    "**Military Spending in the Post-Pandemic Era – IMF F&D**",
    "**Военные расходы в эпоху после пандемии**"
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