A considerable proportion of the resources of each nation is allocated to military expenditure, constituting an economic burden. Militarization often has an important influence on capital intensity and import dependence of their economies. One purchase of military equipment and weapons systems often enhances propensities for subsequent additional expenditures. Both indigenous military production and production of military equipment and components under arrangements for the transfer of technology require substantial imports and other expenditures of foreign exchange. In addition, many development opportunities are lost (whether within a country or in the form of aid to another country) because of the higher priority accorded to such expenditure.
World military spending has been increasing annually in real terms – at 3% growth, this spending is outstripping GNP growth in many countries, so that national budgets are burdened with an ever higher percentage for military outlays.
World military expenditure rose from an estimated US$ 100 billion in 1950 to $190 billion in 1970 (the USA and the USSR between them sharing about 85% of this); for 1983, the SIPRI estimate for world expenditure (at then current prices) was $800 billion, with the USA spending about $185 billion of this and its NATO allies about $120 billion. Global military expenditure in 1985 was in excess of $900 billion, equivalent to over 6% of world output in 1985, namely an increase of about 150% from 4.7% in 1960 (in constant price terms).
The poorest countries together spend around $50 billion on arms. Military expenditure increased more than six-fold between 1960 and 1986. In some of the poorest countries, the military budget is three times as high as the budgets for education and health combined. It has been estimated that the arms imports of a group of 20 countries with relatively large external debts were equivalent to 20% of the rise in their external debt between 1976 and 1980.
In the USA, the 1984 defence budget was US$ 249.8 billion, a 53% increase over 1981, which was $ 162.9 billion. Between 1982 and 1988, $1.996 trillion was budgeted on defence. This equaled $7,000 for every living American, twice the national debt, and 25% more than the full cost of World War II. In fact, this budget could pay for all of World War II plus the entire Social Security programme for two years.
In 2022 alone, the U.S. approved more than $50 billion in aid for Ukraine, half of which went towards military spending, with more promised. The U.S. also maintained some 750 military bases in 80 countries around the world.
Annual military expenditure world-wide exceeds the total income of the poorest half of the world population or the equivalent of almost $1,000 for each of the 1 billion world's poorest. The real cost of the arms race is the loss of what could have been produced instead with the capital, labour and material resources, as well the contribution of military activity to pollution and environmental deterioration.
Increasingly, the ability of a government to wage war relies less on conscripted soldiers and more on drafted dollars to pay for advanced technology. These advanced weapons wreak incredible destruction and death when used. These same weapons also kill when not used by denying resources to those most in need. This is a double violence.
Military spending can have positive spinoff effects on the civilian economy and can be a focus of industrialization efforts of some developing countries. However, any decline in military expenditure as the result of détente and demilitarization tends to be much more gradual than expected. Expenditure cuts tend not to be as large as assumed and tend to be made in long-term programmes so that their impact is not immediately apparent, especially where jobs in defence-related industries are at stake. Cuts may therefore simply result in a zero increase in the military budget, and in non-inflation-adjusted terms may not result in a significant decrease in spending.