International Defence

This section presents information on MOD's commitment to Conflict Prevention, contextual information on NATO countries' defence expenditure and information on the top world-wide military spenders. Table 1.19 presents the estimated costs incurred by MOD in respect of conflict prevention during the past three financial years. Table 1.20 details the defence expenditure in local currency for each of the NATO countries. Table 1.21 presents the defence expenditure as a percentage of GDP for each of the NATO countries. Table 1.22 details the top 15 military spenders worldwide, ranked using Market Exchange rates and Purchasing Power Parity rates.

Main Findings

MOD Operation and Peacekeeping (Table 1.19)

• In 2007/08, the MOD spent around £3.0 billion on conflict prevention worldwide.
  
  
• The net additional cost incurred by the MOD as a result of operations in Iraq and Afghanistan was around £1.5 billion each.
  
  

NATO Countries Defence Expenditure (Table 1.21)

• USA, Turkey and Greece have the highest Estimated Total Defence Expenditure as a percentage of GDP for NATO Countries at 3.8%, 2.8% and 2.8% respectively.
  
  

Top World-wide Military Spenders (Table 1.22)

• In 2007, total worldwide military expenditure is estimated to be US $1214 billion at 2005 prices and exchange rates.
  
  
• The USA is the world's largest military spender accounting for 45% of worldwide expenditure in 2007.
  
  
• In 2007, the UK is the second largest military spender, accounting for around 5% of worldwide military spend, behind the USA (using comparisons based on market exchange rates). The UK is fifth, based on purchasing power parity comparisons, after USA, China, Russia and India.
  
  

Sources of international defence data

International Defence statistics are available in a variety of publications and on a substantial number of websites. A selection of the sources, which may prove useful in making these sorts of comparisons are listed in the Bibliography and Useful Websites sections. Defence Analytical Services and Advice (DASA) has no control over the quality, reliability and coverage of data contained within these sources and does not endorse any specific output.

Data provided in Tables 1.20, 1.21 and 1.22 fall outside the scope of National Statistics and as such, must be regarded as illustrative only.

Limitations of international defence data

Data on defence expenditure are associated with a number of limitations, which are of three main types: reliability, validity and comparability.

The main problems associated with reliability stem from the limited and varying definitions of defence expenditure. The coverage of official data on defence expenditure varies significantly between countries and over time for the same country and, furthermore, in some countries actual expenditure may be very different from budgeted expenditure. These factors limit the utility of international defence expenditure.

A second reason for their limited utility is the very nature of expenditure data. The fact that they are merely input measures gives them limited utility as an indicator of military strength or capability. In reality, the composition of military expenditure has a major impact on the military capability it provides, as does the technological level of military equipment, the state of maintenance and repair, and so on. The most appropriate use of defence and military expenditure data, even when reliably measured and reported, is therefore as an indicator of the economic resources consumed for military purposes.

Comparisons of the defence spending of different countries confront two significant problems. Firstly while there are standard definitions of defence spending and accounting conventions used by the international organisations, principally the UN, not all countries record and publish their defence spending in accordance with such definitions and conventions. Secondly conversion into a common currency using market exchange rates (MER) tends to undervalue the currency and hence the scale of expenditure of lower income countries. Attempts are often made to circumvent this problem using purchasing power parity (PPP) measures. These use currency conversion rates which equalise the overall price of a bundle of goods and services in each country. However PPP measures can be highly inaccurate because of the difficulty of allowing for differences in quality and devising appropriate and relevant “weighting” of individual goods and services. Civilian based PPPs may also not be representative of defence goods and services.

While these problems are fairly insignificant in relation to the comparison of defence spending of NATO members in Table 1.20, they are substantial in relation to the global comparison in Table 1.22.

Note on NATO definition of defence expenditure

The NATO definition of defence expenditure differs from national definitions so the figures quoted may differ from those given in national budgets. Expenditure is included for countries that provide Military Assistance. Expenditure is not included for countries receiving assistance. The financial year has been designated by the year which includes the highest number of months. For example year 2006 represents 2006/07 for Canada and the United Kingdom and 2005/06 for the United States (where the financial year for United States runs from October through to September).

Defence expenditures as of 2002 have been calculated on the basis of the revised NATO definition agreed in 2004, which excluded expenditure on Other Forces from the totals reported to NATO, except in the case of those elements of Other Forces which are structured, equipped and trained to support defence forces and which are realistically deployable. Most nations have reported defence expenditures according to this new definition, and in some cases (Greece, Hungary, Portugal and Turkey), this has resulted in a significant apparent decrease in defence expenditures. A few, however (France, Italy, Luxembourg and Netherlands), continue to have difficulty meeting this requirement and the data provided by these countries did not fully accord with the new NATO definition on defence expenditures. Consequently figures in Tables 1.20 for "NATO Total", "NATO Europe" and "North America" are only indicative.