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Is War A Booming Industry? - Facts & Infographic

"The arms industry is a global business which manufactures weapons and military technology and equipment. It consists of commercial industry involved in research, development, production, and service of military material, equipment and facilities. Arms producing companies, also referred to as defense contractors or military industry, produce arms mainly for the armed forces of states.

Wikipedia.

In the days following the Cold War, the arms industry saw a historic slump. The first decade of the 21st century though has seen an incredible boom in arms trade across the world.

 

Global Defense Spending 2012

Arms procurement forms a considerable part of the defense or military budgets of the countries of the world. The total military expenditure of the world in 2012 was about $1.75 trillion. This adds up to almost to 2.5% of global GDP. While the expenditure is a 0.5% reduction in the global defense spends since 2011, the ever first decline since 1998, it is higher than the expenditure incurred by the nations of the world at the end of the Cold War. This data on the defense spending of 172 states was published in the Stockholm International Peace Research Institute (SIPRI) Military Expenditure Database in April 2013.

The top 15 countries in 2012 in terms of their defense spending are

Country                                Defense Expenditure                               % of GDP

USA                                       $682 Billion                                                    4.4

China                                     $166 Billion                                                   2.0

Russia                                   $90.7 Billion                                                   4.4

United Kingdom                     $60.8 Billion                                                   2.5

Japan                                    $59.3 Billion                                                   1.0

France                                   $58.9 Billion                                                   2.3

Saudi Arabia                          $56.7 Billion                                                   8.9

India                                       $46.1 Billion                                                   2.5

Germany                               $45.8 Billion                                                    1.4

Italy                                        $34 Billion                                                      1.7

Brazil                                     $33.1 Billion                                                    1.5

South Korea                          $31.7 Billion                                                    2.7

Australia                                $26.2 Billion                                                    1.7

Canada                                 $22.5 Billion                                                    1.3

Turkey                                   $18.2 Billion                                                    2.3

 

The military spends of the US in 2012 were more than four times those of China, despite having fallen by about 6% in 2011. The expenditure was over 69% higher than the spends in 2001. China’s defense expenditure in 2012 rose by about 7.8% over the previous year. Of the five nations with the highest defense spending, four are also permanent members of the United Nations Security Council.

 

Top Ordnance Manufacturers

Company

Country

Sales

Profits

Production

Employees

EADS

Netherlands

$59.47 billion

$769 million

aircrafts, electronics, missiles

119,510

United Technologies

US

$52.92 billion

$4.17 billion

aircrafts, electronics, engineering

206,700

Lockheed Martin

US

$45.18 billion

$3.02 billion

aircrafts, electronics, missiles

140,000

BAE Systems

UK

$34.91 billion

$70 million

artillery, aircrafts, ammunition, electronics, missiles, military vehicles, small arms, ships

98,000

Northrop Grumman

US

$33.75 billion

$1.68 billion

aircrafts, electronics, missiles, and ships

120,700

Boeing

US

$32.30 billion

$1.31 billion

aircrafts, electronics, missiles

157,000

General Dynamics

US

$31.98 billion

$2.39 billion

ammunition, artillery, electronics, military vehicles, ships, small arms

91,700

Raytheon

US

$24.88 billion

$1.97 billion

electronics, missiles

75,000

Finmeccanica

Italy

$25.24 billion

$997 million

aircrafts, artillery, ammunition, electronics, military vehicles, missiles, small arms

73,060

L-3 Communications

US

$15.61 billion

$901 million

electronics

67,000

 

According to Richard F. Grimmett's CRS Report for Congress, titled "Conventional Arms Transfers to Developing Nations, 2004-2011", submitted on August 24, 2012, US topped the arms sales between 2004 and 2011 in billions (US dollars). Sales to developing nations far exceeded sales to industrialized countries.

Country

Total Sales (in Bn $)

Sales To Developing Countries (in Bn $)

Sales To Industrialized Countries (in Bn $)

Percent of Total World Arms Sales

United States

220.608

151.4

68.9

44%

Russia

83.323

79

4.2

17%

France

41.96

27.4

14.4

8%

United Kingdom

27.037

25.8

1.1

5%

China

17.808

17.6

0.2

4%

Germany

22.068

11

11

4%

Italy

14.278

8.6

5.6

3%

Other European Nations

48.259

26.9

21.2

10%

Others

27.109

19.8

7.2

5%

Conventional Arms Transfers to Developing Nations, 2004-11

 

Top Importers And Exporters Of Arms

The United States, Russia, and China are among the top arms exporters of the 21st century. The following table shows the value of arms exports of the top countries in millions of USD, in 1990 prices.

Supplier (Country)

2001

2005

2010

2012

United States

5908

6700

8641

8760

Russia

5896

5134

6039

8003

China

499

303

1423

1783

Ukraine

700

290

201

1344

Germany

850

2080

2340

1193

France

1297

1724

1834

1139

United Kingdom

1368

1039

1054

863

Italy

880

538

806

847

Spain

7

108

513

720

Israel

203

583

503

533

Sweden

216

774

806

496

Canada

129

226

258

276

Switzerland

193

246

137

210

South Korea

165

48

95

183

 

The top importers between 2001 and 2010 (in millions USD) were

Importer (Countries)

2001

2005

2010

India

1242

1036

3337

Australia

1191

470

1677

South Korea

623

686

1131

Singapore

220

543

1078

United States

449

501

893

Algeria

553

156

791

Saudi Arabia

397

332

2580

Greece

725

389

703

China

3366

3511

559

United Arab Emirates

186

2198

493

Pakistan

59

148

787

Turkey

553

1005

468

Malaysia

26

51

411

Norway

148

14

205

Indonesia

27

31

198

 

Influence Of The US Arms Industry

The arms industry has historically formed a rather influential lobby and has been known to influence American politics considerably. A World Policy Special Report by William D. Hartung and Michelle Ciarrocca, published in October 2004 found that there was a strong interest of the arms industry in the outcome of the 2004 presidential election. William D. Hartung says "These have been boom years for the arms industry, with contracts for the top ten weapons contractors up 75% in the first three years of the Bush administration alone ... While some of this funding is related to the war in Iraq or the campaign against terrorism, much of it relates to Cold War relics like the F-22 combat aircraft or nuclear attack submarines that have little or no application to the threats we now face or the wars we are now fighting".

In the course of their 2004 election campaigns, George W. Bush and John Kerry were the top recipients of contributions from Political Action Committees (PAC) and individuals associated with the arms industry. The candidates received $766,355 and $399,000 respectively. The arms industry as a whole contributed over $13 million in 2004. According to the Center for Responsive Politics, in 2011-12, the top contributors to election campaigns from the arms industry were

Northrop Grumman

$3,092,373

Lockheed Martin

$3,045,123

Boeing Co

$2,844,669

Raytheon Co

$2,631,809

General Dynamics

$1,830,358

United Technologies

$1,423,149

BAE Systems

$1,101,821

SAIC Inc

$1,000,595

Finmeccanica SpA

$582,746

Honeywell International

$548,804

Harris Corp

$546,974

L-3 Communications

$446,643

Emergent BioSolutions

$326,474

Alliant Techsystems

$311,475

EADS North America

$298,762

DynCorp International

$273,736

General Electric

$252,400

Mantech International

$248,526

Ameriqual Group

$245,712

Sierra Nevada Corp

$245,251

 

The center further says that the annual lobbying on defense comes up to an expenditure of $130,545,396 in 2012. There were 259 clients and 900 lobbyists in all. Broken down by industry, the spending on Defense Aerospace was about $58 million and on defense electronics and on other defense areas were $36 million each. According to data released by the Federal Election Commission in late March, 2013, contributions from the arms industry to the 2014 election campaign stands at $3,243,869. Republicans formed the major recipients, receiving over $1,942,820 while Democrats received $1,299,299 making it a 60-40 ratio. In 2011-2012, 185 Democratic candidates from the US House of Representatives received a total contribution of $5,835,524 from PACs and individuals giving $200 or more. The 238 Republican representatives received $9,738,269. Among the senators, 46 Democrats received $1,694,714 and 42 Republicans received $1,367,813 contributions from the industry. While contributions of the arms or defense industry to the Democrat representatives have taken a dip since 2008, they seem to have risen consistently for the Republicans. Contributions to the Senate peaked in 2008 and have seen a steady decline ever since. The influence of the arms or the defense lobby, though not as full of impact as many others still remains a salient influence in indigenous politics, also influencing foreign relations and decisions to go to war.

 

The Costs Of War

When the costs of war are considered, arms manufacturers seem to be the only beneficiaries. The total cost of the Iraq war to the US is estimated to be $4.4 trillion. In 2012 alone, the US government budgeted $1.38 trillion for the wars in Iraq and Afghanistan. The postwar costs, including healthcare of the veterans from the wars in Iraq and Afghanistan have been estimated to be about $2.6 trillion. At the time of initiation, President Barack Obama had referred to the estimated cost of war as about $1trillion. A study by the Brown University's Watson Institute for International Studies says that the real costs exceed this estimate by over 4 times. According to the study, the government estimates overlook a number of pertinent expenditures including long-term payments and healthcare costs of veterans and wounded soldiers, interests, and other incalculable costs.

The United Kingdom has similarly made an estimate of its costs towards the wars in Iraq and Afghanistan. And these are predictably quite as high. According to The Telegraph, as of June 2010, UK has incurred a cost of about £18 billion ($31.5 billion USD) on the wars in Afghanistan and Iraq.

Are these costs worth the war is the question raised by the Watson Institute. Do the wars benefit any group apart from the arms and defense industry?

 

Defense Or Poverty?

The huge military budget of countries stands out in perspective if we look at the poverty in the world. According to economists, a marked improvement in the poverty situation of the 20 poorest countries would cost about 0.5 billion – almost about the same as the defense spends of a country such as Uruguay. A significant reduction in the debts of the world’s most indebted nations is likely to cost between 0.5 and 7.5 billion USD. A B-2 stealth bomber costs the US Air Force about $1.5 billion. The costs of ending extreme poverty in the world are likely to be about $175 billion per year for 20 years, according to the estimates of Goldman Sachs. This represents just a little over the military budgets of the top five world spenders for the next three years at current levels. It is also only about 1% of the combined income of the richest countries in the world. In 2005, when Sachs formulated the theory ‘The End of Poverty’, this cost represented about 0.7% of the total income of the 30 countries who were members of the Organisation for Economic Co-operation and Development (OECD). As of 2013, the military spends are much higher for these member nations and the cost of ending poverty not much different in proportion.

Is The Arms Trade Recession Free?

In February 2011, The Guardian ran a news article based on the SIPRI report. The report showed how the world’s largest arms manufacturing companies managed to increase their sales significantly even as the world was negotiating its way through an exceptionally hard recession. According to the SIPRI, the 100 largest arms manufacturers around the world increased their sales by about 8% in 2009. That year their sales rose by $14.8 billion to a total of $400 billion.

According to the SIPRI arms industry expert, Susan Jackson, the "key factor in arms sales increases for US arms-producing and military services companies and for western European companies with a foothold in the US arms and military services market".

In February 2013, Middle East's biggest arms show took off at the International Defence Exhibition (IDEX), in Abu Dhabi. Over 80 arms manufacturing companies from 15 countries put up their products. At the time, Richard Weitz, the director of Hudson Institute's Center for Political-Military Analysis remarked that the estimates of China's contribution to arms sales across the world have been mostly excluded, which that could be the reason arms sales seem to be dropping, despite the industry being as robust as ever.

 

Sources

http://en.wikipedia.org/wiki/List_of_countries_by_military_expenditures

http://www.statista.com/statistics/157935/countries-with-the-highest-military-spending/

http://books.sipri.org/files/FS/SIPRIFS1304.pdf

http://www.guardian.co.uk/news/datablog/2012/apr/17/military-spending-countries-list

http://www.rediff.com/business/slide-show/slide-show-1-worlds-biggest-arms-producing-companies/20110505.htm#5

http://www.marineinsight.com/wp-content/uploads/2011/09/110921Mandusc-infographic.gif

http://www.globalissues.org/article/74/the-arms-trade-is-big-business

http://www.worldpolicy.org/projects/arms/reports/TiesThatBind.html

http://www.opensecrets.org/industries/lobbying.php?cycle=2012&ind=D

http://www.opensecrets.org/industries/totals.php?cycle=2012&ind=D

http://www.opensecrets.org/industries/indus.php?Ind=D

http://demonocracy.info/infographics/usa/cost_of_war/cost_of_war.html

http://www.reuters.com/article/2011/06/29/us-usa-war-idUSTRE75S25320110629

http://www.teamstoendpoverty.org/wq_pages/en/visages/chiffres.php

http://regansravings.blogspot.in/2011/01/price-of-b-2-stealth-bomber.html

http://www.guardian.co.uk/business/2011/feb/20/global-arms-sales-rose-recession

http://www.defence.pk/forums/military-forum/236153-shift-global-arms-trade.html

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