March 19, 2012: For the last twenty years major Asian nations, like India and China, have steadily increased their defense budgets. This has now reached the point where, for the first time in centuries, defense spending is higher in Asia than in Europe. Some 80 percent of Asian defense spending is done by just five countries (China, Japan, India, South Korea, and Australia) and China accounts for the biggest chunk of that.
Since the end of the Cold War in 1991, European nations, not surprisingly, have sharply cut their defense spending. This was particularly the case with Russia, which cut spending by over 70 percent. But many other European nations made cuts of 50 percent. After centuries of ever more violent, and expensive, wars, Europe was disarming on a large scale. Most of the cuts occurred in the 1990s. Then things began to change, partly because of what happened on September 11, 2001.
In the past decade global defense spending has increased nearly 50 percent to over $1.4 trillion. That's about 2.5 percent of global GDP. After the Cold War ended in 1991, defense spending declined and hit a low of just 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 62 percent in the last decade. The region with the lowest growth (six percent) was Western Europe. The current recession may get global defense spending stalled at or maybe even a little below, $1.4 trillion for a year or two. But the spending growth has resumed now that the recession is over in many parts of the world.
One factor that has not changed much is the predominance of the American defense budget, which accounts for about half the defense spending on the planet. China's growing defense budget, the second largest in the world, is only a quarter of what the U.S. spends. But now the U.S. defense budget is shrinking, while China's will continue to grow.