A commonly cited metric used to highlight American dominance in the post-Cold War era is that not only does the United States spend more on its defense than any other country in the world, but that it actually shells out more than the next 10 highest defense spenders combined.
However, 2014 will mark a milestone as projected U.S. military expenditures of $581 billion are actually exceeded by the $588 billion collectively spent by the next nine biggest nations, according to IHS Aerospace, Defense & Security analysts. This trend is set to accelerate in the coming years, with U.S. defense spending declining by as much as 25 percent from 2011 to 2020 in real terms, while other states—notably China—will continue to increase their spending.
IHS projects that by 2020, the next five biggest spending countries will devote a combined $546 billion to defense, compared to $540 billion by the United States.
While some may seize on these countervailing trends as further evidence that U.S. military superiority is threatened, however, IHS believes that America will maintain its military edge for the foreseeable future.
Peace dividend becomes a defense boom
In the wake of the 1991 collapse of the Soviet Union, the gap between U.S. military spending and that of its nearest competitors widened significantly. No other state was capable of approximating America’s investment in modern equipment and highly trained personnel, allowing the United States unparalleled military dominance over the following two decades. In 2011, when the U.S defense budget was almost at its post-World War II peak, spending of $720 billion in fact slightly exceeded the combined sum of the comparable defense budgets of the next 19 highest spending countries, which totaled $718 billion.
The projected shift in global spending figures highlights the departure from the age where one country—the United States—spent almost as much as the rest of the world combined and enjoyed a historically unique level of conventional military dominance. Now, however, the international system is shifting to equilibrium, under which one single state does not so massively tip the scales in its own favor.
At home the winding down of military operations elsewhere in Iraq and Afghanistan as well as the impact of fiscal consolidation will mean a continued decline in defense spending. At the same time, growing tensions in Eastern Europe and the Middle East, along with the ongoing economic and strategic emergence of Asia, will spur higher military expenditures for countries in those regions.
The battle over defense
These trends in defense spending will serve to fuel domestic U.S. political debates over whether the United States risks losing critical military advantages over near-peer competitors. Nevertheless, America still dwarfs the rest of the world when it comes to individual national levels of spending. This will remain true through 2020 and most likely for many years afterward.
Moreover, defense spending alone is an imperfect proxy for national military capability.
The United States, with its advanced economy, high levels of R&D spending and technological superiority, is able to get more bang for its buck when it comes to defense expenditures than any other country. Conversely, a state like China faces significant technical and operational challenges to its military modernization efforts, no matter how much money Beijing can pour in.
The large numbers of personnel in China and Russia mean the United States spends almost five times as much per service member, generating unique advantages in training and equipment.
And even though the age of U.S. dominance in worldwide military spending is gradually winding down, with 2014 marking another milestone, IHS maintains that this trend should not over interpreted. The United States will remain the biggest military spender for the foreseeable future and enjoys unique advantages that will only reinforce its preeminence.
Furthermore, the long-standing military posture of the U.S. will largely be preserved through continued investment in military personnel, equipment, capabilities and training.
This analysis draws on forecasts in IHS Jane’s DS Forecast and IHS Jane’s Defence Budgets. IHS also produces an annual study into global defense budgets: The Balance of Trade: The Changing Worldwide Defense Trade Market