U.S. Defense Spending vs. Global Defense Spending
by Travis Sharp [contact information]
February 26, 2009
The United States is far and away the global leader in defense spending. In 2007, the most recent year for which complete data is available, the United States approved $660 billion in defense budget authority (FY09 dollars). This figure includes funding for DOD’s base budget, DOE-administered nuclear weapons activities, and supplemental appropriations for Iraq and Afghanistan.
- With its budget of $660 billion, the United States spent more on defense in 2007 than the next 14 highest spending countries in the world combined.
- The United States accounted for 43% of the world’s total defense spending in 2007.
- In 2007, the United States spent 4.6 times more on defense than China, 7.7 times more than Russia, 85.2 times more than Iran, and 100 times more than North Korea.
From 2005 to 2007, annual U.S. defense spending increased by $95 billion after adjusting for inflation. While this increase was greater in dollar terms than the annual defense budget of every country in the world except China, in percentage terms it only totaled 17% because the U.S. budget was relatively massive. The United States may spend far more on defense than any other country in the world, but it does not have the fastest growing defense budget in the world. That distinction belongs to Kazakhstan, which saw its defense budget increase by 84% from 2005 to 2007 after adjusting for inflation. (Table 6 below)
Press reports indicate that while some countries plan to rein in their defense spending in 2009 due to the sagging global economy, others will continue to increase their annual defense expenditures. Russian officials said in February 2009 that Moscow plans to submit an official 2009 budget of approximately $33 billion, a 15% cut from 2008. However, Russia still plans to spend $111 billion between 2009 and 2011 to purchase new weapons and modernize its armed forces. China has not yet announced its 2009 defense budget plans, but its official 2008 budget grew by 17.6% from the previous year. (Russia and China’s official figures significantly understate spending, as explained in the note on methodology below). India announced its intention to increase its defense budget in 2009 by 34% over the previous year’s level.
Table 5. Defense Spending by Countries of Interest, 2007
(in billions of constant FY09 U.S. dollars; U.S. figure includes war & nuclear funding)
(in billions of constant FY09 U.S. dollars; U.S. figure includes war & nuclear funding)
| Country | 2007 Spending | Global Rank |
| United States | 660.0 | 1 |
| China | 144.5 | 2 |
| Russia | 85.3 | 3 |
| United Kingdom | 65.8 | 4 |
| France | 63.1 | 5 |
| Germany | 43.8 | 6 |
| Japan | 42.7 | 7 |
| Italy | 39.3 | 8 |
| Saudi Arabia | 36.9 | 9 |
| South Korea | 27.6 | 10 |
| Israel | 12.1 | 17 |
| Taiwan | 10.0 | 20 |
| Iran | 7.7 | 23 |
| North Korea | 6.6 | 28 |
| Pakistan | 4.7 | 33 |
| Venezuela | 2.9 | 49 |
Table/Chart Notes: U.S. figure includes funding for wars and nuclear weapons. North Korea figure is estimate from U.S. State Department. Data from Congressional Research Service, Office of Management and Budget, International Institute for Strategic Studies, State Department
Table 6. Countries with Fastest Growing Defense Spending Between 2005 and 2007
(real growth adjusted for inflation; U.S. figure includes war & nuclear funding)
(real growth adjusted for inflation; U.S. figure includes war & nuclear funding)
| Country | Real Growth, 2005-2007 | Global Rank |
| Kazakhstan | 84% | 1 |
| Angola | 80% | 2 |
| Ukraine | 57% | 3 |
| Jordan | 57% | 4 |
| Slovakia | 55% | 5 |
| Thailand | 51% | 6 |
| Austria | 50% | 7 |
| Brazil | 46% | 8 |
| Romania | 45% | 9 |
| Indonesia | 42% | 10 |
| Russia | 33% | 13 |
| China | 27% | 19 |
| United States | 17% | 28 |
| France | 8% | 44 |
| United Kingdom | 5% | 50 |
| Germany | 4% | 51 |
Table Notes: U.S. figure includes funding for wars and nuclear weapons. Data from Congressional Research Service, Office of Management and Budget, International Institute for Strategic Studies.
A NOTE ON METHODOLOGY
Estimating other countries’ military spending is no easy task. Besides the complications involved in comparing different currencies, there is no such thing as an agreed-upon international definition for “defense expenditure.” Many countries count spending differently. Transparency is also an issue because some countries may not want the international community to know exactly how much they spend on defense.
The analysis above uses data from The Military Balance 2009, the authoritative reference almanac produced annually by the International Institute for Strategic Studies. A few words are needed on the defense spending estimates for China and Russia. Both of these countries regularly underreport their annual military budgets. The Military Balance 2009 typically uses market exchange rates to convert countries’ defense spending figures into U.S. dollars. In the case of China and Russia, however, the market exchange rates fail to fully reflect the purchasing power of the yuan and the ruble, respectively. To compensate for this, The Military Balance 2009 uses a methodology known as Purchasing Power Parity (PPP) to calculate a more balanced figure. With the exception of the 2007 figure for China, all of the figures for China and Russia in the analysis above use PPP figures, which are significantly higher than both officially reported and market exchange rate figures. The 2007 figure for China uses the high-end estimate provided by DOD in its annual report on China’s military power because a PPP figure is not included in The Military Balance 2009.
The bottom line is that this analysis uses the highest possible defense spending estimates for China and Russia. This is a departure from the methodology utilized in previous versions of this analysis.
Travis Sharp 202-546-0795 ext. 2105 tsharp@armscontrolcenter.org
Travis Sharp is the Military Policy Analyst at the Center for Arms Control and Non-Proliferation. He has published articles on defense policy in scholarly journals, internet magazines, and local newspapers, and has appeared on or been quoted in media venues such as the New York Times, Washington Post, Boston Globe, CNN, and Al Jazeera.
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