Monday, 31 March 2014

How much are other NATO members free-riding off US military spending?

In view of Russia's recent military activities, it has been suggested that NATO members increase their military spending so as to create a stronger deterrent. According to the Stockholm International Peace Research Institute, NATO members spent $990 billion on the military in 2012. However, the percent of GDP spent on the military varies considerably across countries. Among the ten biggest spenders in NATO (on absolute terms), the United States spends by far the most at 4.4% of GDP, while Spain spends the least at only 0.9% of GDP. This has led some commentators to argue that other NATO countries are free-riding off US military spending.

The ten biggest spenders in NATO are, in order of decreasing spending as percent of GDP: the US, the UK, Turkey, France, Poland, Italy, Germany, the Netherlands, Canada, and Spain. These ten countries collectively account for 96% of NATO's military spending. Assuming for the sake of simplicity that they paid for all of NATO's military spending, if each country spent the same percentage of GDP on the military, then that figure would by 2.98%. The chart below displays the percentage change in military spending that would obtain in each country under this hypothetical scenario. The US would spend about 30% less, and every other country would spend more. The UK would spend only 20% more, while Spain would spend 240% more. (Calculations are based on data from the World Bank and the SIPRI.) 

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