Countries With the Fastest Growing (and Shrinking) Militaries

Published by 24/7wallst.com

By Thomas C. Frohlich April 14, 2016 4:50 am EDT

Military spending in the United States totaled $596 billion in 2015, far and away the largest annual military expenditure in the world at nearly three times that of second-place China. While the U.S. military will likely not be outspent any time soon, American defense spending has declined each year since its most recent peak in 2010. Meanwhile, a number of other countries have substantially increased their military budgets in recent years.

The nations of the world spent $1.68 trillion on their militaries in 2015, up slightly from 2014, the first global increase since 2011. Based on annual military expenditures estimated by the Stockholm International Peace Research Institute (SIPRI), 24/7 Wall St. reviewed the 10 countries with the largest one-year military expenditure increases as well as the 10 nations with the largest military spending declines.

Short-term spikes in military spending are often in response to heightened regional tensions or a country’s ongoing involvement in a conflict. According to Dr. Sam Perlo-Freeman, senior researcher at SIPRI, “It’s not surprising that in light both of ongoing conflicts and the rebuilding post conflict that large increases of military spending are going on” in these war-torn areas.

Click here to see the countries with the fastest growing militaries.

Click here to see the countries with the fastest shrinking militaries.

Click here to see the countries spending the most on military.

Violent conflicts help explain the one-year military spending growths in nearly all of these nations with the largest spending increases. Perceived threats from Russia, which used its enormous military might to annex Crimea in 2014, likely triggered Poland’s decision to increase military spending. The Philippines is another example. The small island nation increased its military budget by over 25% last year due in large part to heightened tensions with China over fishing rights in the South China Sea.

Ultimately, the strength of a nation’s economy dictates the growth of its military spending. In Uruguay, Paraguay, and several other South American nations, a conflict was not necessary to trigger defense spending sprees. Just as the largest military spenders tend to be among the wealthiest nations in the world, strong economic conditions in Uruguay and Paraguay largely explain the defense spending increases in those nations.

By the same logic, a country mired in violent conflict may not be able to expand its military spending. War and violence are still raging in Afghanistan, for example. However, the withdrawal of international aid has led to the nation’s 19.0% military spending drop. Similarly, in South Sudan, where the military has its hands full with civil war, military spending dropped by 25.4% because of poor economic conditions. Well over half of South Sudan’s government revenue comes from oil, and the precipitous drop in oil prices largely explains the spending decrease.

This was the case in a number of the nations recording the largest military spending declines. Most notably perhaps are Oman and Venezuela, the nations with the fastest and 10th fastest shrinking military budgets. Both of these countries are major oil producers. While military spending in these nations dropped considerably over the last year, their military spending as a share of GDP actually rose over the same period, reflecting the sharp decline in their economic output.

To identify the countries with the fastest rising and fastest falling military budgets, 24/7 Wall St. reviewed the increases in military expenditures from 2014 through 2015 as estimated by the Stockholm International Peace Research Institute (SIPRI) in its most recent annual “Trends in World Military Expenditure, 2015” report. We only considered countries with military expenditures of at least $100 million. Spending as a share of GDP and absolute spending figures for 2015, 2014, and 2006 also came from SIPRI. Military expenditure data include all current and capital expenditure on:

  • The armed forces, including peacekeeping forces
    • Defence ministries and other government agencies engaged in defence projects
    • Paramilitary forces, when judged to be trained and equipped for military operations
    • Military space activities
    • Military and civil personnel, including retirement pensions and social services for military personnel
    • Operations and maintenance
    • Procurement
    • Military research and development
    • Military aid (in the military expenditure of the donor country)

We also considered 2015, 2014, and 2006 per capita GDP from the International Monetary Fund (IMF). Gross domestic product is based on purchasing power parity (PPP) and is in current international dollars.

These are the countries with the fastest growing (and shrinking) military expenditures.


Countries with largest defense spending increases

  1. Paraguay
    > Military spending 1 yr. increase:
    > 2015 military spending:$462 million
    > Region: South America
    > Population: 6.90 million

Paraguay’s military expenditure of $462 million rose by 20.8% last year, the 10th largest one-year spending increase of countries reviewed. Financial instability often triggers military budget cuts, and in times of economic growth nations tend to raise budgets. Like in several other South American countries, the defense spending boosts in Paraguay are the result of strong economic conditions. The country’s per capita GDP of $8,671 is up from the previous year. Paraguay’s defense spending amounts to 1.6% of GDP, also an increase from 1.4% in 2014.

  1. Poland
    > Military spending 1 yr. increase:
    > 2015 military spending:$10.5 billion
    > Region: Central Europe
    > Population: 38.02 million

The defense spending spike in Poland reflects rising fears of threats from Russia — the world’s fourth largest military spender. Tensions are high in the region, especially since Russia annexed Crimea in 2014, which had been part of Ukraine. Polish military spending reached 2.2% of its GDP in 2015, in contrast with spending levels in past years, which consistently remained below 2%. Poland announced its 10-year, $35 billion military modernization plan in 2013, which includes the purchase of 32 combat helicopters, 97 drones, hundreds of armored vehicles, naval vessels and coastal defense systems — to name just a few of the major purchases.

  1. Kenya
    > Military spending 1 yr. increase:
    > 2015 military spending:$954 million
    > Region: Sub-Saharan Africa
    > Population: 42.93 million

Kenya’s 22.4% increase in military spending last year was the eighth largest in the world. Over the past 10 years, the East African country’s military spending increased by 46.7%, also one of the largest such increases. The country’s involvement in neighboring Somalia’s conflict with the militant Islamist group al-Shabab largely explains the spending growth. Kenya joined the UN-backed African Union force in Somalia at the end of 2011.

  1. Uruguay
    > Military spending 1 yr. increase:
    > 2015 military spending:$962.55 million
    > Region: Americas
    > Population: 3.4 million

Recessions tend to precede military budget cuts, and in times of economic stability and growth nations tend to raise budgets. The defense spending boosts in Uruguay and several other South American countries are due to the relatively strong economic conditions there. Uruguay has one of the highest regional per capita GDPs at $21,719. Of South American countries, it also has the fastest growing military expenditure.

  1. Philippines
    > Military spending 1 yr. increase:
    > 2015 military spending:$3.9 billion
    > Region: South-East Asia
    > Population: 99.4 million

The Philippines is one of several nations involved in territorial disputes in the South China Sea mainly with China, which has the second largest military expenditure in the world. Beyond the oil deposits that may lie under the sea, the countries in the region are fighting primarily over fishing rights. The Philippines is one of the world’s largest fish producers. Fish is essential for the economies of the Philippines and surrounding regions.

In April, 5,000 U.S. troops participated in the annual Balikatan military exercise with the Philippines armed forces.

  1. Luxembourg
    > Military spending 1 yr. increase:
    > 2015 military spending:$303.2 million
    > Region: Western Europe
    > Population: 600,000

Major world powers such as the United Kingdom and United States have urged their fellow NATO members to spend at least 2% of their GDP on defense. For Luxembourg, this appears to be an unrealistic goal as military spending as a percentage of GDP, at just 0.5%, ranks among the very lowest in the world. Investment as a percent of GDP remained small even after the country’s military expenditure increase of nearly 30% in 2015. The increase may have been a response to U.S. and NATO urging. Perlo-Freeman suggested that for Luxembourg the short-term spike may be a one-off equipment purchase. For major military powers these purchases occur every year, but for Luxembourg they are only made occasionally.

  1. Lithuania
    > Military spending 1 yr. increase:
    > 2015 military spending:$471.4 million
    > Region: Central Europe
    > Population: 2.9 million

The Lithuanian government reinstated conscription in 2015 to bolster the ranks of its military. According to the Lithuanian Ministry of Defense, the move follows Russia’s annexation of Crimea and the deteriorating relations with its neighbor. Of Baltic states reviewed by SIPRI, Lithuania’s military expenditure increase was by far the largest, at 32.7%. By contrast, the respective spending increases in Estonia and Latvia were 6.6% and 13.7%.

  1. Iraq
    > Military spending 1 yr. increase:
    > 2015 military spending: $13.1 billion
    > Region:Middle East
    > Population: 34.3 million

The U.S. military withdrawal from Iraq and Afghanistan had a major impact on military spending in the region. But while defense spending in Afghanistan dropped precipitously last year, Iraq’s expenditure rose by 35.3%, trailing just two other nations. Over the last 10 years, spending in the country rose by 535.6%, the largest 10-year growth of any country in the world.

The Iraqi government has rebuilt its military in the wake of the U.S.-led invasion. The country’s expensive struggle with the Islamic State terrorist group is also a major reason for Iraq’s military budget and spending increases.

  1. Democratic Republic of the Congo
    > Military spending 1 yr. increase:
    > 2015 military spending:$491.3 million
    > Region: Sub-Saharan Africa
    > Population: 79.3 million

Military spending in the Democratic Republic of the Congo (DRC) increased by 42.6% last year and by 139.0% over the past 10 years, each among the largest such increases worldwide. War has ravaged the eastern DRC since the 1990’s, and like many other countries on this list, the conflict has had a major impact on defense spending. While economic decline often triggers the tightening of military budgets, this has not been the case in the DRC. The country is perhaps the most impoverished nation in the world with GDP per capita of only $753.

  1. Mali
    > Military spending 1 yr. increase:
    > 2015 military spending:$309.1 million
    > Region: Sub-Saharan Africa
    > Population: 15.8 million

Mali boosted its military spending by 65.5% last year, by far the largest spending spike worldwide. Over the last 10 years, military expenditure in the West African country increased by 185.1%, the eighth largest increase of countries reviewed over that time period. Like a number of other countries with soaring military budgets, Mali is not an especially peaceful place. France, the country’s former colonial ruler, has had a major military presence in Mali since it intervened in January 2013 to help stabilize the country following a coup in 2012. The northern part of the country is currently mired in a struggle against numerous militant Islamic groups.

Chart by @janes.com

Countries with largest defense spending declines

10. Oman
> Military spending 1 yr. decrease:
> 2015 military spending: $9.9 billion
> Region: Middle East
> Population: 3.72 million

Oman’s military expenditure, which at nearly $10 billion annually is among the highest in the world, declined by 10.1% last year — the 10th largest decrease. Over the last 10 years, by contrast, the country’s defense spending increased by 75%. As is the case with a number of other countries cutting military budgets, the short-term spending decline in Oman is largely due to the decline in the price of oil. Oman is the world’s largest non-OPEC producer of crude oil in the Middle East. In fact, despite the decline in military spending, spending as a percentage of GDP actually increased from 13.9% to 16.2% — by far the largest such share in the world.

9. Ecuador
> Military spending 1 yr. decrease:
> 2015 military spending: $2.7 billion
> Region: South America
> Population: 16.03 million

Oil prices had a nearly direct impact on military spending in Ecuador. The 93% spending increase over the last 10 years coincided with soaring oil revenues. As oil prices plummeted last year, however, so did defense spending. Ecuador’s military expenditure fell by 11.3%, ninth largest worldwide and the third steepest drop in South America. Across the region, military spending fell by 4.0% last year. Ecuadorian military spending as a percentage of GDP, while also down from last year, is still 2.7% and among the largest such shares.

8. Brunei
> Military spending 1 yr. decrease:
> 2015 military spending: $424 million
> Region: South-East Asia
> Population: 413,000

With a population of just over 400,000, Brunei is the smallest country on this list. Its military spending, on the other hand, at $424 million annually, is not especially small. The Southeast Asian nation’s economy, highly dependent on oil, is also not especially small. Its GDP per capita of $72,370 is one of the highest globally. Due in part to the sharp drop in oil prices starting in 2014 and the resulting revenue drop, however, the government slashed its military spending.

7. Albania
> Military spending 1 yr. decrease:
> 2015 military spending: $132 million
> Region: Central Europe
> Population: 2.77 million

Defense spending dropped by 13.1% in Albania, the seventh largest military expenditure decrease worldwide. Economic constraints are likely the primary explanation for the decline in military spending as the country announced budget cuts last year amid a revenue shortfall and unwillingness to raise taxes. Of countries with the sharpest drops in defense expenditure, Albania is the only NATO member, and the cuts will likely make meeting its obligations to the military alliance far more difficult.

6. Bolivia
> Military spending 1 yr. decrease:
> 2015 military spending: $535 million
> Region: South America
> Population: 11.29 million

While Bolivia’s military spending drop of 18% last year was among the largest in the world, the country’s arms expenditure still rose by 46.2% over the last 10 years. Bolivia’s proven crude oil reserves are among the smallest in the world. The natural gas industry, however, is a major component of the country’s economy. The global declines in the price of oil and natural gas likely partly explain the budget cuts.

5. Afghanistan
> Military spending 1 yr. decrease:
> 2015 military spending: $199 million
> Region: South Asia
> Population: 31.28 million

Military spending could have been expected to increase in Afghanistan to offset the withdrawal of foreign troops — the drop in U.S. military spending was due largely to its withdrawal from the region. Instead, the country’s 19% defense budget decline last year trailed the declines in just four other countries. Most of the country’s defense spending comes from foreign military aid, and precipitous drops in foreign assistance largely account for Afghanistan’s tighter military spending. Many donors have lost confidence in the country’s ability to manage aid.

4. South Sudan
> Military spending 1 yr. decrease:
> 2015 military spending: $1.4 billion
> Region: Sub-Saharan Africa
> Population: 11.38 million

The ongoing civil war in South Sudan, in which tens of thousands of people have been killed, may explain the country’s relatively high 2015 military expenditure of $1.4 billion — especially compared to the region. The spending accounts for 13.8% of South Sudan’s GDP, the second highest share worldwide. South Sudan seceded from Sudan in 2011, and the country is now responsible for most of the region’s oil production. Like a number of countries that had increased military spending in recent years, however, the precipitous fall in oil prices has forced the sharp declines in South Sudan’s military spending.

3. Chad
> Military spending 1 yr. decrease:
> 2015 military spending: $221 million
> Region: Sub-Saharan Africa
> Population: 11.28 million

Chad’s economy grew by leaps and bounds after it started producing oil in 2003. Military spending rose over that time as well, and the pressure to militarize was likely great during the country’s 2005-2009 civil war. Chad also has the 10th largest oil reserves of countries in Africa. Since the end of the war and following the sharp drop in the price of crude oil in 2014, defense spending has fallen by 35.4%.

2. Angola
> Military spending 1 yr. decrease:
> 2015 military spending: $3.6 billion
> Region: Sub-Saharan Africa
> Population: 24.38 million

Oil production is a major source of revenue collected by the Angolan government. According to the Energy Information Administration, Angola is the second-largest oil producer in Africa, and the second-largest supplier of crude to China. While defense spending in oil-dependent nations did not necessarily decline last year, the recent drop in oil prices likely led to steep cuts in Angola’s government revenues, which in turn led to military spending cuts.

1. Venezuela
> Military spending 1 yr. decrease:
> 2015 military spending: $5.3 billion
> Region: South America
> Population: 30.46 million

The massive 63.6% military spending drop in Venezuela last year accounted for a 4% decline in spending across all of South America, where defense budgets have risen by 27.0% over the last 10 years. Venezuela is struggling with an economic crisis triggered by the falling price of oil. The South American nation has the world’s largest proven oil reserves at nearly 300 billion barrels. Second-place Saudi Arabia has 266.6 billion barrels of proven reserves.

Chart by @theintercept.com

Countries Spending the Most on War

10. South Korea
> Military expenditure:
 $36.4 billion
> Pct. change military expenditure, 2006-2015: 36.7%
> Expenditure as pct. of GDP: 2.6%
> Per capita military expenditure: $720

South Korea’s annual military expenditure of $36.4 billion is the 10th largest worldwide. Of the top 10 military spenders, South Korea is one of only a few countries with mandatory military service. Like the relatively large defense budget, South Korea’s conscription policy is due largely to tensions with its neighbor, North Korea. The isolated Korean dictatorship has recently achieved nuclear capabilities, triggering further spending increases in South Korea — which is bound by a nuclear non-proliferation treaty.

9. Germany
> Military expenditure:
 $39.4 billion
> Pct. change military expenditure, 2006-2015: 2.8%
> Expenditure as pct. of GDP: 1.2%
> Per capita military expenditure: $482

In light of the growing refugee crisis in Europe, Russian military shows of power such as the annexation of Crimea, and the growing threats of organized terrorist groups, a number of European countries have signaled military spending increases. Also, German Chancellor Angela Merkel indicated recently that, due in part to pressures from the United States, the parliament should make adjustments to the military budget next year.

Germany is one of the wealthiest nations in the world. Its per capita GDP of $46,896 is the 15th highest of countries reviewed. The country spends a relatively small share of its GDP on defense, at just 1.2%.

8. Japan
> Military expenditure:
 $40.9 billion
> Pct. change military expenditure, 2006-2015: -0.5%
> Expenditure as pct. of GDP: 1.0%
> Per capita military expenditure: $323

Japan’s utter defeat during World War II — 2.7 million Japanese lives were lost — crippled the country’s military. In the new American-written constitution, Japan was prohibited from having a military and permitted to fight only under direct attack. Due to the island nation’s powerful economy, however, the Japanese Self-Defence Force, while technically pacifist, is still one of the world’s largest. Despite only a modest 1.0% increase last year and 0.5% decline over the last 10 years, Japan overtook Germany last year in defense spending, although this was mainly due to the euro’s continued long-term drop against the dollar. In May 2015, Japanese Prime Minister Shinzo Abe proposed revisions that would loosen the post-war restrictions. The proposed legislation passed in July.

7. France
> Military expenditure:
 $50.9 billion
> Pct. change military expenditure, 2006-2015: -5.9%
> Expenditure as pct. of GDP: 2.1%
> Per capita military expenditure: $792

France, one of the top three military spenders in Europe, has reduced military spending by 4.5% last year and by 5.9% over the last 10 years — relatively large declines. Military expenditure still comprises more than 2% of French GDP — the stated benchmark for NATO countries and a goal strongly encouraged by other superpowers such as the United Kingdom and United States. Like the U.K. and Germany, France has also indicated it will increase spending in future years. While President Francois Hollande has supported budget cuts to reduce French national debt, he also stated in April of last year that France will raise security spending. The move is likely tied to the heightened threats from terror attacks, and any defense budget cuts may not be welcome after the November 2015 Paris terrorist attacks.

6. India
> Military expenditure:
 $51.3 billion
> Pct. change military expenditure, 2006-2015: 43.1%
> Expenditure as pct. of GDP: 2.3%
> Per capita military expenditure: $40

India’s military expenditure of $51.3 billion grew by 0.4% last year, one of the smaller growth rates, particularly when compared to other national spending growths in the region — India is the second largest military spender after China in the Asia and Oceania region. However, India plans to increase spending by approximately 8% in 2016, according to SIPRI. The Indian government, led by Prime Minister Narendra Modi, has prioritized the modernization of its armed forces as well as shifting to more domestic sources to move out of its status as the world’s largest arms importer.

The planned increase is also likely due in part to tensions with Pakistan. Also, as is true for a number of other nations in the greater region, the spending growth is partially a reaction to the ever-expanding military strength of China, according to SIPRI.

5. United Kingdom
> Military expenditure:
 $55.5 billion
> Pct. change military expenditure, 2006-2015: -7.2%
> Expenditure as pct. of GDP: 2.0%
> Per capita military expenditure: $854

While military spending in the U.K. rose by 0.9% last year, its position in the top 10 countries has steadily fallen from its once dominant second-place spot in 2006, and the nation’s arms expenditure dropped by 7.2% over the last 10 years. Largely due to strong urging by the United States, the U.K. spends around 2.0% of its GDP on the military, in line with the threshold suggested by NATO. As is the case with the United States, a portion of U.K. military spending goes to U.K.-based arms manufacturers. BAE Systems, the third largest arms-producing and military service company in the world, is based in the United Kingdom.

4. Russia
> Military expenditure:
 $66.4 billion
> Pct. change military expenditure, 2006-2015: 91.3%
> Expenditure as pct. of GDP: 5.4%
> Per capita military expenditure: $454

The world’s largest military spenders do not necessarily have the largest expenditures as a percentage of GDP. Russia, however, is one of the top military spenders in the world in terms of both annual spending and expenditure as a share of GDP, which at 5.4% is the seventh highest globally. Russia is the only country on this list to record a decline in GDP per capita last year. Despite the weak economic conditions, however, the country’s defense spending is on the rise. The number of Russian companies ranking among the world’s largest arms manufacturers also continues to increase. According to SIPRI, surrounding countries such as Poland and Romania also increased military spending in large part due to fears of threats from Russia. These fears have arisen primarily from Russia’s annexation of Crimea in 2014.

3. Saudi Arabia
> Military expenditure:
 $87.2 billion
> Pct. change military expenditure, 2006-2015: 97.1%
> Expenditure as pct. of GDP: 13.7%
> Per capita military expenditure: $2,778

At an estimated 266.6 billion barrels, Saudi Arabia has the second largest proven crude oil reserves in the world after Venezuela. With the precipitous drop in oil prices in recent years, a number of other oil-dependent nations reduced their defense budgets. Despite the decline in oil prices, Saudi Arabia has consistently amassed immense oil wealth that ensured stable economic conditions and allowed larger military expenditures. The country’s annual defense spending of $87.2 billion is the third highest in the world and far and away the largest in the Middle East. Military spending in Saudi Arabia nearly doubled over the past 10 years.

As Perlo-Freeman explained, the Saudi military is also quite active. Notably, the country has led military operations in Yemen and Syria in recent years.

2. China
> Military expenditure:
 $214.8 billion
> Pct. change military expenditure, 2006-2015: 131.7%
> Expenditure as pct. of GDP: 1.9%
> Per capita military expenditure: $156

While China’s military expenditure of $214.8 billion trails the United States by a considerable margin, it is still an enormous investment. Chinese military expenditure, at quadruple India’s spending, accounts for roughly half of all defense spending in the region. Reports of China’s slowing economic growth have not hindered the country from further investing in its military. Over the last 10 years, China’s military expenditure shot up 131.7%, the 15th largest such growth of all countries reviewed.

Like Russia and other military superpowers, Chinese military activities in the South China Sea have triggered defense spending spikes in bordering nations such as the Philippines, Vietnam, and Indonesia.

1. USA
> Military expenditure:
 $596.0 billion
> Pct. change military expenditure, 2006-2015: -3.9%
> Expenditure as pct. of GDP: 3.3%
> Per capita military expenditure: $1,854

Annual U.S. military spending accounts for 36% of the world’s military spending. No other country comes close to spending as much as the United States — neither in absolute terms nor as a share of global military expenditure. The United States spends close to three times more than second-place China on its military. Following the Great Recession, and the withdrawal from Iraq and Afghanistan, the U.S. defense budget has declined for several years. However, the 2015 decline of 2.4% was the smallest cutback since 2011.

A considerable portion of the country’s military budget is spent on equipment manufactured by U.S. companies. Of the world’s 10 largest arms manufacturers — such as Lockheed Martin, Boeing, and Raytheon — seven are based in the United States.

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