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Working Paper Summaries (WP/94/1 - WP/94/76)
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Working Paper Summaries 94/69: Military Expenditure and Arms Trade: Alternative Data Sources

Author(s):
International Monetary Fund
Published Date:
August 1994
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The limited amount of transparent, comprehensive data from individual country sources frequently hampers the analysis of the economic impact of military expenditures and arms trade. Country-specific information can be supplemented, however, by data from multicountry statistical publications. This paper describes the major publicly available, multicountry statistical sources on military expenditures and arms transfers. Appendices describe each source in more detail and show data reported for recent years.

A great deal of data on military expenditure and arms trade is available in these multicountry sources. For expenditure data, most countries are covered by more than one source, and the data are usually available for a number of years. As a result, the available data provide, both globally and for many individual countries and groups of countries, a basis for analyzing trends and levels in military expenditure. For trade data, however, some sources cover only a limited number of countries and report trade data for many countries only for cumulative time periods.

In some cases, the data are reported directly by governments, but often the data are built up from a number of primary sources. The accuracy and comprehensiveness of the primary data can vary considerably, both by source and by country. Data sources have different purposes, and the data reported, the method of reporting, and the definitions used by a source reflect the purpose. In addition, significant differences can result from the timing of transactions, from differences on valuation technique, and from differences in exchange rates used to convert local currency expenditures into reported dollar expenditures. Unfortunately, the reported data--particularly expenditure data--generally lack sufficient detail to allow the user to discern whether a given difference is due to definition, exchange rate, timing, valuation, or information.

Comparing the published military expenditure data reveals that the sources frequently show significantly different levels and trends in global, regional, and national military expenditures from 1988 through 1991, both in individual years and for the entire period. Cross-source differences were also found in military expenditure as a percentage of GDP, whether evaluated globally, nationally, or by economic grouping. Only limited comparisons can be made of trade data, but generally the differences between sources are in the direction that would be expected from their differences in coverage.

Several things could be done to improve the usefulness of available data. First, governments are in the best position to improve the coverage and accuracy of their own published data. Second, greater detail in the multicountry sources would enable the user to understand better how the data are estimated, and how definitional and other differences affect cross-source discrepancies. Finally, improvements in the timeliness of some of the data would be helpful.

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