Abstract
This paper studies the evolution of worldwide military spending during 1970-2018. It finds thatmilitary spending in relation to GDP is converging, but into three separate groups of countries. Inthe largest group, responsible for 90 percent of worldwide spending, outlays have remainedstubbornly high. Military spending in developing economies reacts to improvements in securityconditions and military spending in neighboring countries, suggesting that further increases inthe peace dividend are possible. In developing economies, rising social spending tends to crowdout military outlays, but this is not the case in advanced economies. With social outlays projectedto rise as developing countries look to achieve the Sustainable Development Goals (SDGs),military spending could come under pressure to fall further.
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