In the context of Russia’s invasion of Ukraine and potential threats in the region, defense spending is growing significantly, especially in Europe. How or when this war will end remains probably the most important open question that has pushed world leaders to make important decisions regarding support to Ukraine and to what extent their own defense budgets should increase. With all this in mind, will this spending on defense systems be to the detriment of funding other crucial sectors in developing countries? Let’s see what the experts have to say about this.
Key Takeaways:
- The United States had the highest military spending in 2021, with US$801 billion dedicated to the military, which represents 38% of the total military spending worldwide that year
- According to the EU’s foreign policy chief, Josep Borrell, EU countries are planning to increase their defense expenditure by €70 billion by 2025 in order to fill existing capability gaps
- Defense spending can stimulate economic growth by creating jobs and increasing national production, but it can also translate into less investment in other sectors – mention international experts
DevelopmentAid: How does defense spending affect economic growth?
“On the one hand, defense spending can stimulate economic growth by creating jobs and generating income for companies involved in the production and supply of military equipment. It can also lead to technological advances in areas such as communication, aerospace, and cybersecurity. On the other hand, defense spending can have a negative effect on economic growth by absorbing a large part of the government’s financial resources. This can lead to less investment in other sectors such as health, education, and infrastructure which are also essential for economic development.”
“In general, the consensus among economists is that defense spending promotes economic growth, especially when it concerns the national production of hardware as this stimulates large value chains of business, resulting in an immediate boost in purchasing power and the generation of positive externalities. Moreover, spending on new technologies and systems drives innovation that could create new industries, with a positive effect on future economic growth. In the EU, growth in defense spending is still needed to hit the 2% target, and as such should be very welcome. If economies already have a high level of defense spending, the effect of increasing this will be diminished or could even have a negative effect (future) economic growth, if it results in the depletion of resources that would otherwise have been used by other industries.”
“The outcome of defense and non-defense spending levels depends on the variances we use in the models. Since the current political actions do not take public debt into serious consideration, it seems that the decision-makers are convinced that defense spending contributes to growth.”
DevelopmentAid: Will this spending be to the detriment of funding other crucial sectors from developing countries? Argue your position.
“In the case of developing countries, investment in military defense can be even more problematic. These countries often face more pressing economic challenges such as poverty, hunger, and disease. Defense spending can therefore come at the expense of financing other sectors that are crucial for economic and social development. Ultimately, the decision to invest more in military defense is complex and will depend on each country’s national priorities. Governments must strike a balance between national security and economic and social development, ensuring that resources are allocated efficiently and equitably to meet the needs of their people.”
“It is not likely that defense spending in the context of the Ukraine crisis will have a negative influence on other crucial sectors from developing countries as these budgets, in the case of the EU, will have been determined using long-range planning up to 3 to 7 years in advance. Moreover, as defense spending leads to economic growth, it also is likely to have positive spin-off effects to the economies and national programs of developing countries.”
“There is no reason that increased defense spending will be detrimental to funding crucial sectors of developing countries. Aid to developing countries and military spending have a similar underlying rationale although implemented as different expenditure categories.”
See also: Will donors’ aid disbursements to Ukraine increase or drop in 2023? | Experts’ Opinions
In the context of Russia’s invasion, the largest donors have joined forces not only to support Ukraine but also to strengthen their own defense systems. If you are interested to learn more about the biggest players in international aid, check the Donors Menu on www.developmentaid.org, where you can find general information on the donors that DevelopmentAid works with. Become an Individual Professional Member Professional Plus to check the Country eligibility tool where members have access to information regarding the eligibility to work for a specific donor as an independent consultant as well as access to donors’ procurement guidelines and any regulations regarding subcontracting procedures for individuals.
