For the second year in a row global defense spending declined. In 2013 the global total for defense spending was $1.75 trillion, down 1.9 percent from 2012. Spending was down .4 percent in 2012. What’s leading this decline are sharp cuts in the West (especially the U.S. and Europe). Actually if you exclude the United States, defense spending went up 1.8 percent in 2013. That’s because there’s an arms race going on in the Persian Gulf and East Asia. This is all about oil-rich Arab states buying the latest and most expensive military tech in an effort to deal with increasing aggressiveness by Iran. In East Asia China is the leading spender and the neighbors, under threat by growing Chinese claims on their territory, are also increasing their spending.
Another factor is that a decade of heavy defense spending, to replace a lot of the elderly Cold War era equipment is coming to an end. Also ending, for the United States, are the expensive war on terror operations in Iraq and Afghanistan. The U.S. military, especially the army and marines, used the demand for new weapons and equipment in Iraq and Afghanistan as an opportunity to replace a lot of aging Cold War gear. The air force and navy did not do as well and now, with American defense spending shrinking, there will be fewer American warplanes and warships because the money and popular support for replacing a lot of the Cold War era warships and aircraft is not there.
Most Western nations deliberately shrank their armed forces after the Cold War ended. This included China and Russia, although both of these nations are still buying a lot of modern gear. Russia does it now because it was too broke in the 1990s to buy much and the Chinese because they didn’t have a modern force at the end of the Cold War and are determined to take the lead in this area.
This recent decline in military spending is in contrast to years of growth. Since September 11, 2001, global defense spending increased nearly 50 percent, to over $1.7 trillion. That's about 2.5 percent of global GDP. After the Cold War ended in 1991, defense spending declined for a few years to under a trillion dollars a year. But by the end of the 1990s it was on the rise again. The region with the greatest growth has been the Middle East, where spending has increased over 60 percent in the last decade. The region with the lowest growth (six percent) was Western Europe. Five years of world-wide recession and the decline in spending by most Western nations has helped stall global defense spending at $1.7 trillion a year. Western defense firms are feeling this the most, as their sales have been flat for the last three years.
The nations with the highest defense spending are; United States, China, Russia, Saudi Arabia, France, Britain, Germany, Japan, India and South Korea.