The opportunity cost of world military spending | SIPRI

The opportunity cost of world military spending | SIPRI


By Dr Sam Perlo-Freeman

• Today SIPRI estimated that global military expenditure in 2015 was $1676 billion, about 2.3% of the world’s total Gross Domestic Product (GDP). Such high levels of spending frequently raise concerns as to the ‘opportunity cost’ involved in military spending—the potential civilian uses of such resources that are lost.

One way to put this in perspective is to compare it to social spending. Do governments spend as much money on healthcare, for example? We can also look at what else the money could achieve if it were put to other specific uses. In particular, how far would this money go towards achieving the UN’s Sustainable Development Goals (SDGs)?

To compare spending on military and health expenditure worldwide, we need reliable data. For the military data, we use the latest figures from SIPRI’s military expenditure database. For the health data, we use the World Health Organization’s most recent estimates of government health expenditure as a share of GDP. This includes spending at all levels of government: central, federal, regional, municipal, etc. This is necessary to make meaningful comparisons, as in some countries the great majority of health spending takes place at levels below that of central government. The data is available via the World Bank World Development Indicators database and has been recalibrated so that it’s based on the same GDP figures as SIPRI’s data, which come from the IMF International Finance Statistics.

How does health spending compare with military spending? First of all, the good news: governments worldwide spent just over two and a half times as much on health than on the military in 2013: 5.9% of global GDP went to public health spending, compared with 2.3% for the military.

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In 2015 the United Nations agreed a set of 17 new Sustainable Development Goals (SDGs) as successors to the Millennium Development Goals. Many of these would require substantial financial investment, both by developing and donor countries, as well as political and social changes. How far could cuts to world military spending go towards achieving some of the SDGs, if the resources freed were devoted to these goals? Here are a few examples, with the estimates compared to the current level of military spending.

Reallocating only around 10% of world military spending would thus be enough to achieve major progress on some key SDGs, supposing that such funds could be effectively channelled towards these goals and that major obstacles, such as corruption and conflict, could be overcome.

Of course, getting countries to agree to reductions in military spending is no easy matter, especially at a time when global tensions have been rising. How would such cuts be distributed? Would more be expected of the biggest powers? How would countries that consider themselves in a vulnerable situation react to such a proposal?

Nonetheless, the examples above give some idea of the vast opportunity costs involved in current levels of world military spending.

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2 Responses to "The opportunity cost of world military spending | SIPRI"

  1. Sean   April 9, 2018 at 11:44 pm

    Do you have 2017 expenditures up anywhere?

    • JO   April 9, 2018 at 11:47 pm

      We don’t and I don’t think they exist yet – but thanks anyway! – Jan Oberg


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