## Saturday 1 August 2015

### World Military Expenditure

I’ve been studying the SIPRI military expenditure database quite closely, trying to get my head around the statistics to do with world totals. The first challenge is the sheer size of the data: billions and trillions of \$US. According to the latest SIPRI factsheet (April, 2015), world military expenditure in 2014 was \$1776 billion. If you look at the raw spreadsheet data, you get a more exact figure of

\$1776.15478538343 (billion)

That’s this number: \$1776154785383.43

The SIPRI database is the best available, and reading the fine print on their data collection methods[i] you can’t help but be impressed by their rigour. Officially released military spending data from governments is checked against a variety of independent secondary sources. If the data is not available they very carefully make an estimate from secondary sources. Sometimes they can’t even do this, so some countries get completely excluded from their calculations. A note on the spreadsheet reads:

“Both sets of estimates also exclude the following countries: Cuba, Haiti, North Korea, Myanmar, Somalia, Yemen (South), and Yugoslavia (former). This is due either to data being missing for too many years to make meaningful estimates, or to an absence of economic data to enable conversion to constant (2011) US\$.”

So we can be sure that the ‘exact’ figure is in itself an estimate, the figure above with the 43 cents is an effect of the various mathematical devices used to project estimates where data is missing. Given the rigour of the method, and the fact that several countries are completely excluded because of their lack of reliable data, we can also be fairly sure that the SIPRI total figure is a conservative figure. Let’s round that figure above then, with all this in mind:

\$1776 billion = \$1.776 trillion = \$1776155 million

How can we understand such huge sums of money?

One way is to compare with ‘Gross World Product’, the sum of all countries GDP. Again we are dealing with a massive figure which needs to be treated with due caution: there are different measures of GDP, data transparency issues and so on. But to get a rough idea let’s use the estimated 2014 value of \$77,868 billion US dollars, from the CIA World Factbook[ii]. Working out total military expenditure as a percentage of GWP, we get 2.28%. The same kind of calculation was carried out by the SIPRI statisticians in 2013, with a very similar figure for total world military expenditure in 2012 (\$1.756 trillion). They got a slightly higher figure – 2.5% of Gross World Product[iii].

Just what exactly is Gross World Product? It’s simply the dollar value sum of all things in the world with some form of price tag. It includes both very straightforward commodities like a \$10 bag of potatoes, and more abstract valuations like a million dollar Picasso painting. It also includes the category of “services”: Services cover government activities, communications, transportation, finance, and all other private economic activities that do not produce material goods[iv].

Let’s avoid the more nebulous and complex sectors of the economy completely and stick with potatoes. Commodities like potatoes fall under the “agriculture” sector of the economy. This includes ‘farming, fishing and forestry’. I’m guessing it refers to the potatoes before they get bagged and transported to the supermarket. It’s all of the trees that get cut down for wood before the logs are processed, ditto for all of the fish, cows, sheep, pigs and so on. It’s all of the rice in the world, all of the grains and all of the fruit and all of the vegetables. All of the food that you eat has its origins in this fundamental economic sector, and chances are the building you are in right now contains a fair amount of wood derived from the forestry sector. We have to remember the fact that all the processing, packaging, transport and retail aspects will actually make up a bigger portion of the final price for most of these products. But even so it is without question a huge, necessary and fundamental economic sector. Because of things like steel, concrete, nylon and synthetic food additives we can’t claim that it represents the material basis for all of the food, clothing and housing needs of every person on the whole planet. It must come pretty close to this though.

So what percentage of Gross World Product is agriculture? The answer is just 6%[v]. That means that world military expenditure is the same as more than one third of the entire agriculture sector. Military expenditure is equivalent to approximately 40% of the value of the whole agricultural sector.

Another way to give context to military expenditure is to compare it with spending on health, education and aid. The SIPRI website has a useful summary of these (using 2008 data):

In 2008, the most recent year for which data is available, public education expenditure amounted to 4.6 per cent of global GDP, and public health expenditure amounted to 5.7 per cent of global GDP. Military expenditure, according to SIPRI's estimates, was 2.4 per cent of global GDP. (In US\$, this amounts to \$2794 billion for education, \$3475 billion for health, and \$1513 billion for military spending).

The WDI also have data for overseas aid. Total net Official Development Assistance (ODA) received worldwide in 2010 was \$130.5 billion, compared to world military spending of \$1629 billion[vi].

So to summarise, world military expenditure is currently equivalent to

·         About 40% of the entire agriculture sector of the world economy

·         About 50% of world spending on public education

·         About 40% of world spending on public health

·         More than 12 times what the world spends on aid each year

Another way of seeing world military spending in perspective is to imagine that all the countries of the world pooled their military spending together. A large island is set aside for this military state, let’s call it Mars after the Roman god of war. How would this 100% pure military state rank alongside the other countries? I used 2013 data[vii] to get the answer: Mars would rank just above 12th placeholder Australia, and just below 11th placeholder Canada.

Is world military expenditure increasing or decreasing?

This graph tells the story up to 2012. The latest SIPRI data factsheet http://books.sipri.org/files/FS/SIPRIFS1504.pdf has a similar graph which tells the same story: although there has been a slight decrease over the past few years, 2015 military spending is still bigger in real terms than it was in 1988 (before the end of the cold war). The factsheet also provides a good breakdown of which countries and regions are increasing their military expenditure and those which are spending less.

All of these facts and statistics demand explanation and interpretation. I’m going to explore these questions in another post, but till then here is a link to an article by Richard Seymour written in 2014:

[i] http://www.sipri.org/research/armaments/milex/copy_of_faqs#5-where-does-your

[ii] https://en.wikipedia.org/wiki/Gross_world_product

[iii] http://www.globalissues.org/article/75/world-military-spending

[iv] https://www.cia.gov/library/publications/the-world-factbook/fields/2012.html

[v] 2013 estimate http://www.indexmundi.com/world/economy_profile.html

[vi] http://www.sipri.org/research/armaments/milex/copy_of_faqs#9-how-does-world