Military Spending Falls to Record Levels as World Governments Cut Costs

In an effort to cut spending and tighten up budgets, major governments across the world have cut their military spending, according to an April 15 report by the Stockholm International Peace Research Institute (SIPRI).

The SIPRI, which tracks global military expenditures on a regular basis, found that world military spending fell in 2012, the first time such a decrease was seen since 1998. In the United States the reductions in military spending dropped below 40 percent of total global spending for the first time since the end of the Soviet Union.

Spending dropped 6 percent in 2012 alone, to $682 billion, a change seen primarily in reduced war spending and new budget controls. Likewise, austerity policies implemented in 2012 in response to the Eurozone crisis lowered military spending in countries across Europe.

While total military spending fell, not all nations reduced their budgets. On the contrary, the SIPRI found that total spending in Asia and Oceania rose by 3.3 percent in 2012. China, in particular, increased expenditures by 7.8 percent to $11.5 billion, maintaining its position as the second-largest spender. Russia increased expenditures by 16 percent. Spending in the Middle East and India also increased.

Despite these increases, general Asian military spending slowed down markedly between 2009 and 2012, falling from around 7 percent on average to only 3.4 percent. The organization predicts that world spending on military projects will continue to fall for the next several years, while spending in emerging markets will continue to increase.

The shrinking of military budgets, particularly budget cuts in the U.S. Department of Defense, could lead to a loss of contracts. However, the move could also lead to new cost-cutting projects as departments seek new technology to help better manage projects and control current spending.

According to The Washington Post, current contracts — at least in the U.S. market — tend to favor management solutions. Adnet Systems recently won a major Air Force contract for life cycle management work. The Navy also awarded a complex contract for “Decision Superiority” support services. Similar April 2013 contracts from the Defense Department and Agency of International development concentrated on administrative functions, targeted primarily at companies that can help governments streamline their strategies and reduce costs wherever possible.

Paradoxically, cost-cutting could open the door for additional new contracts or technologies that governments have largely ignored until now. For example, a recent Information Week article pointed out that widespread budget slashes in the United Kingdom were leading to new involvement in open standard IT solutions — low cost or free, open source software with the big-budget maintenance of proprietary technology. For a more customized alternative, companies like the General Services Administration are attempting to combine multiple services under one contract to meet new government needs. Rather than wasting time and money on multiple contract negotiations, governments could use these jumbo contracts to meet several needs in finances, logistics and management simultaneously.

[cf]skyword_tracking_tag[/cf]

Please Leave A Comment

comments

Related posts:

Payroll Tax Increase Leads to Budget Surplus in January Governments Flock to Cloud Computing Market, Predicts Technavio Spending Cuts, Tax Increases and Uncertainty Will Slow Economic Growth in 2013 Colleges and Universities Offering Many Services for Veterans and Military Members Student Debt Levels Vary By State, Highest Levels in Midwest and East