Defence spending across the world increased significantly in 2019 according to a report by the Institute of Strategic Studies (ISS). The data collected by the ISS for 2019, shows that world-wide defence spending increased by 4% in real terms, with the two largest spenders, the US and China, both increasing real spending by 6.6%.
On closer inspection of the findings, we can see that despite both Chinese and American defence spending seeing a similar increase, the actual trend in their commitment to defence budgets is changing. Where the US saw the largest budget increase in 10 years, the growth of spending in China is actually reducing in size. This could signify two things. Firstly, that America under President Trump is committed to maintaining global dominance in both the size and financial might of its military, and secondly that perhaps China is feeling the squeeze from its financial slowdown and is having to cut spending in even the most important sectors of their economy.
One thing is for sure: with the continued commitment to spending billions of dollars on the military by countries all around the world, we’re certainly not any closer to world peace. This new decade has seen an unstable start to say the least, from coronavirus to high-level political assassinations, to the accidental downing of civilian airplanes. These are tumultuous times indeed, and all we can do is hope that things get better!
THINK LIKE AN ECONOMIST!
Q1. What is meant by the term ‘real terms’?
Q2. Explain a positive impact of the increased defence spending on an economy.
Q3. Analyse the reasons why a financial slowdown in China could be a reason for the slowing growth (year-on-year) in their defence spending.
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