Not an academic paper highlighted this week but a feel-good article from the IMF in their Finance and Development series from researchers Benedict Clements, Sanjeev Gupta and Saida Khamidova (the full article is here Military Spending In the Post-Pandemic Era).
The authors note military spending, globally, has been in a long term decline with health, education and infrastructure budgets being the major beneficiaries. The chart below shows the fall.
Country by country military spending isn’t converging however but taking one of three different paths depending on how much conflict a country is experiencing or how fractious the neighbors have been, or are likely to be.
The good news is the big spenders are a small group and the middling spenders (the blue-camp above with 90% of the global budget) are continuing to either moderate or further reduce spending.
The article avoids the ruler-on-the-chart-line conclusion that the future will be like the past but points out that in the post-COVID world the need to balance budgets will require all expenditure and income options to be looked at afresh.
In the absence of a rise in global tension therefore there seems to be more scope for defense budgets to shrink in favor of the investment in human capital that had been the norm in the period prior to the pandemic; and who wouldn’t want that?
Happy Sunday.