A considerable proportion of the resources of each nation is allocated to military expenditure, constituting an economic burden. Militarization often has an important influence on capital intensity and import dependence of their economies. One purchase of military equipment and weapons systems often enhances propensities for subsequent additional expenditures. Both indigenous military production and production of military equipment and components under arrangements for the transfer of technology require substantial imports and other expenditures of foreign exchange. In addition, many development opportunities are lost (whether within a country or in the form of aid to another country) because of the higher priority accorded to such expenditure.
World military spending has been increasing annually in real terms – at 3% growth, this spending is outstripping GNP growth in many countries, so that national budgets are burdened with an ever higher percentage for military outlays.
Global military expenditure in 1985 was in excess of $900 billion. World military expenditure rose from an estimated US$ 100,000 million in 1950 to $190,000 million in 1970 (the USA and the USSR between them sharing about 85% of this); for 1983, the SIPRI estimate for world expenditure (at current prices) was $800,000 million, or (for comparison purposes) $600-650,000 million at 1980 prices, with the USA spending about $185,000 million of this and its NATO allies about $120,000 million. The United Nations estimates the current annual world military expenditure to stand at about $1,000,000,000,000. Global military expenditure has risen from an estimated 4.7% of world output in 1960 to over 6% in 1985, namely an increase of about 150% in constant price terms.
In the USA, the 1984 defence budget was US$ 249.8 billion, a 53% increase over the last budget for 1981, which was US$ 162.9 billion. Between 1982 and 1988, if Congress agrees, US$ 1.996 trillion are expected to be spent on defence. This equals $7,000 for every living American, twice the present trillion dollar national debt, or 25% more than the full cost of World War II. This budget would pay for all of World War II plus the entire Social Security programme for two years.
Annual military expenditure world-wide exceeds the total income of the poorest half of the world population or the equivalent of almost $1,000 for each of the 1 billion world's poorest. The real cost of the arms race is the loss of what could have been produced instead with the capital, labour and material resources, as well the contribution of military activity to pollution and environmental deterioration.
Military spending can have positive spinoff effects on the civilian economy and can be a focus of industrialization efforts of some developing countries. However, any decline in military expenditure as the result of dÃ©tente and demilitarization tends to be much more gradual than expected. Expenditure cuts tend not to be as large as assumed and tend to be made in long-term programmes so that their impact is not immediately apparent, especially where jobs in defence-related industries are at stake. Cuts may therefore simply result in a zero increase in the military budget, and in non-inflation-adjusted terms may not result in a significant decrease in spending.