Military spending – What it is, definition and concept | 2023

Military spending includes the resources destined to the modernization and maintenance of the armed forces of a country.

States need armed forces that guarantee their territorial integrity, act as a deterrent and protect their population. Hence the need to include military spending in public budgets.

Thus, defense ministries or departments use the resources provided through public budgets to finance military spending. However, the way in which the different items are managed and assigned will not only influence the public sector, but also private companies and, in particular, the arms industry.

It should be noted that military spending does not include amounts corresponding to police forces. Thus, military spending is made up of the salaries of the professional soldiers themselves, insurance, civilian defense support personnel, equipment, weapons, supplies, installations, and communications.

Defense, a public good

As it is not the object of consumption, defense is considered a public good, that is, it can only be provided by the State. While it is true that more and more private military contractors are emerging.

The fact of allocating resources to defense implies reducing other items such as health and education, among many others. In other words, the allocation of budget items for military purposes carries with it opportunity costs. In fact, it is common to compare defense spending with health spending or with education spending.

What is included in military spending?

Military spending involves the costs of maintaining military installations, paying military personnel, their equipment and infrastructure, regardless of whether it occurs in a period of peace or in a period of war.

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Thus, military spending represents a measure of a country’s deterrence capacity. For this, the expenses and investments in equipment and platforms are valued.

Likewise, the measurement of military spending is a good reference indicator for those countries that are part of large military alliances such as NATO. Hence, when assessing the military contributions of each country in an alliance, their defense spending is valued.

A cost that is difficult to measure

One of the big problems with military spending is its quantification and comparability. This is a difficult variable to measure. To all this we must add the opacity of many countries when it comes to detailing their military expenditures. Nor should we forget that countries use very different standards for measuring military spending.

However, NATO, to measure military spending, takes into account the spending of national governments on operating costs, construction costs, acquisitions and weapons.

By contrast, the IMF values ​​broader considerations when measuring military spending. In this sense, the IMF takes into account the expenses of all administrations (national, regional and local) in civil and military defense, R&D expenses and military aid received from abroad. Precisely, the UN also includes foreign military aid in its assessment of defense spending.

Likewise, it should be noted that there is controversy when it comes to classifying various budget items as military spending corresponding to the Department of Defense. This is the case of items such as the costs of space programs, spending on R&D, social security or participation in international missions.


There are economists who advocate stimulating military spending. This happens in countries like the United States, which has a powerful arms industry. Thus, through public spending, the private sector is promoted, jobs are created, new technologies emerge and new industries appear. In other words, many American economists maintain that a large part of their country’s well-being is linked to the progress of the arms industry.

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On the contrary, the increase in public spending on defense can lead to excessive indebtedness on the part of the State. Likewise, there are also those who maintain that these budget items could be destined to more productive investments in the civil sector or to social items destined to meet the needs of the population.

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