The Military Balance 2007 estimates world military expenditure in 2005 to have been approximately $1.2 trillion. A plausible estimate for current world spending is $1.35 trillion. By contrast, the SIPRI yearbook estimates 2006 world expenditure to have been around $1.2 trillion. The estimates differ largely because The Military Balance relies more heavily on Purchasing Power Parity when comparing nations’ expenditures, while the SIPRI volume uses exchange rates.
If we go by SIPRI figures, the global military spending amounts to about 2.5 percent of the world GDP. This is, however, still less than the peak Cold War numbers, which reached a peak in the late 1980s, when spending (adjusted for inflation) went past $1.6 trillion a year. After the Cold War ended in 1991, worldwide spending fell by nearly half, to about $900 billion a year.
Whereas the United States accounted for 28 percent of world defense expenditures in 1986 and 34 percent in 1994, it today accounts for approximately 50 percent. The $647.3 billion US defence budget (excluding around $215 billion for homeland security, veterans’ affairs and outstanding 2007 war costs) represents a 75 percent real increase over the post-Cold War low-point in US defense spending, which occurred in 1996. Today’s US defence expenditures are higher in inflation-adjusted terms than peak spending during the Vietnam and Korean wars — as well as higher than during the Reagan buildup.
In comparison, all of Europe has an annual defence expenditure of over $200 billion; all of Asia, about the same; the Middle East, over $100 billion; while Africa and the rest of the Americas account for another $30 billion or so. [The Indian defence budget for the year 2007-08 is approximately $23 billion.]
During the Cold War, there were over a hundred million people under arms; there are fewer than 40 million people under arms now. Then, factories turned out thousands of tanks, hundreds of warplanes and dozens of warships each year. Now, tank production rarely exceeds a few hundred a year, with annual warplane production of less than a hundred a year, and only a handful of warships being produced every year. It should mean that a major portion of global defence spending is not on buying weapons, but on payroll, benefits and materials. But the legacy of cold war ensures that it is not so; piles of surplus tanks, warplanes, warships and weapon platforms left after the cold war continue to be transacted in the global arms market even today.
There is little solace, if any, in the words of Dwight D. Eisenhower
Every gun that is made, every warship launched, every rocket fired signifies in the final sense, a theft from those who hunger and are not fed, those who are cold and are not clothed. This world in arms is not spending money alone. It is spending the sweat of its laborers, the genius of its scientists, the hopes of its children. This is not a way of life at all in any true sense. Under the clouds of war, it is humanity hanging on a cross of iron.