NCPA - National Center for Policy Analysis

Peace Dividends

July 1, 1996

Global military spending fell from 3.6 percent of the world's gross domestic product in 1990 to just 2.4 percent in 1995, according to a new study by the International Monetary Fund.

  • States defense spending fell from 5.3 percent of GDP to 3.5 percent, while spending in the former Soviet Union plummeted from 8.4 percent to 3.1 percent.
  • Worldwide, only 25 countries increased military budgets, while 90 cut them.
  • If military outlays had stayed at 1990 levels as a share of GDP, annual military outlays would be $345 billion higher.

The IMF reports that those countries that made sharp cuts in military spending also tended to reduce nonmilitary spending and fiscal deficits, while boosting social spending. On the other hand, the few countries that raised military spending also tended to increase nonmilitary spending and their fiscal deficits, while reducing capital spending.

Source: Gene Koretz, "Fewer Guns, More Butter," Business Week, July 1, 1996.


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