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Article

World Economy in Transition

Author(s):
International Monetary Fund. External Relations Dept.
Published Date:
January 1990
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Are LDCs spending too much on defense?

There is no easy answer to this question, except that, like all other expenditure decisions, each country must weigh its security needs against the long-term development needs of its people. Purely in terms of some of the traditional measures of the relative weight of such expenditures, some developing countries have undertaken huge military outlays, often with borrowed external financing, thereby adding to their burden of external debt. The scale of such expenditures has been a cause for concern, provoking much recent commentary, including calls for controlling military expenditures from the President of the World Bank and the Managing Director of the IMF.

In recent years, the growth of developing country military expenditures appears to have slowed and, in some cases, even declined. But this may be more as a result of tighter economic conditions than explicit efforts to cut back the share of such outlays within individual countries. In making comparisons between different expenditure categories, it must be understood that reducing military expenditures will not necessarily translate into greater resources for one or more of the social sectors. But, at the very least, such comparisons indicate budget priorities against the needs of populations, and may be useful for reordering expenditure priorities.

Data on military expenditures are difficult to collect and compare. The information on this page has been gleaned from two established sources in an effort to provide an overview of long-term trends in this area.

Public expenditures on the military and social sectors, 1960-871

Source: World Military and Social Expenditures, 1983, by Ruth Leger Sivard.

1values expressed in 1986 prices and in general converted to dollars at 3-year average exchange rates. Percentages and per capita data are adjusted for any differences in country coverage between GNP and expenditure series, expenditures and population, etc.

Data for Afghanistan. Cambodia, Equatorial Guinea. Laos, Lebanon, and Viet Nam are not available for many years during the period shown.

Military versus economic growth in LDCs

Source: Sivard, 1989.

Value of the Index is in 1986 dollars.

Arms imports versus economic aid

Arms imports versus total imports, 1978-88

Source: Military Expenditures and Arms Transfers. 1989. by US Arms Control and Disarmament Agency.

1In constant 1988 dollars.

2Because some countries exclude arms imports from their trade statistics and their “total” imports are therefore understated and because arms transfers may be estimated independently of trade data, the resulting ratio may be overstated and may even exceed 100 percent.

3Includes transfers to NATO agencies as such, which are not attributable to individual recipient countries.

Note: In order to reduce distortions in grouped data trends caused by data gaps for individual countries and years, the totals for the world and regions include rough approximations for the gaps.

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