Aggregate world military spending continued to fall in 1994, driven largely by falling expenditure levels in the industrialized countries. Procurement bore the brunt of the reductions in Russia and in NATO, where the cuts were mainly led by the USA. Further planned US cuts in procurement may prove to be unrealistic. In Russia the defence budget process appears to have settled down, and the 1994 budget (not approved until July 1994) was for military expenditure of 40.6 trillion roubles or 5.99% of GDP.

Military spending also declined in the CIS countries. The preponderance of cuts in the industrialized countries and the FSU should not conceal the fact that military expenditure is rising or remains at very high levels in regions such as the Middle East and South Asia, where there appears to be a trend towards increasing outlays. India and Pakistan increased their expenditure between 1992 and 1994 by 12% and 19.5%, respectively. As economies grow in South-East Asia, the types of weapon being purchased there indicate clearly that major resources are being committed to enhancing power-projection capabilities.

However, without reliable data on defence budgets, exchange rates and inflation figures it is difficult to determine meaningful comparative statistics. Data on China and the former Soviet republics are inadequate; and it has become more difficult to gain access to transparent data on defence budgets for the CEE countries in recent years. Because of these problems, SIPRI has not attempted to produce an aggregate figure for world military spending.

* Appendix 12A contains tables of world military expenditure and appendix 12B explains the sources and methods of the data collection.