According to a group of UN-appointed military experts global military spending was nearly 950 billion dollars in 2004 and will surpass 1 trillion dollars in 2005. But what makes up these 950 billion dollars? It is obvious that the 950 billion is the sum of military expenditures worldwide, but how is the military spending of each country determined? What does military spending pay for?

Definition of Military Spending:
There is a lack of detailed data on military spending that makes it hard to apply a common definition worldwide. However, the Stockholm International Peace Research Institute (SIPRI) has adopted, based on the NATO definition, the following definition as a guideline.

Where possible, military expenditure data include all current and capital expenditure on:
A. The armed forces, including peacekeeping forces
B. Defense ministries and other government agencies engaged in defense projects
C. Paramilitary forces, when judged to be trained and equipped for military operations

These expenditures should include:
A. Military and civil personnel, including retirement pensions of military personnel and social services for personnel
B. Operations and maintenance
C. Procurement
D. Military research and development
E. Military aid (in the military expenditure of the donor country)

Not include are:
Civil defense and current expenditures on previous military activities, such as veterans’ benefits, demobilization, conversion and weapon destruction.

In actuality it is impossible to apply this definition worldwide, because there is not enough sufficient data on the military expenditures of each country. What is typically done by researchers is to over time apply a uniform definition to each country, instead of adjusting figures for single years according to a common definition. Due to these difficulties, military expenditure data are not suitable for close comparisons between individual countries. They are better suited for comparisons of changes in military spending over time.

* Please Note that military spending is not identical to military strength. Also, a military spending figure is a certain source's estimate and that figures may differ slightly from source to source. For example the above 950 billion for 2004 is the estimate of a U.N. appointed panel. Another organization may estimate that military spending for 2004 was 934 billion or 960 billion. There is no way of determining the actual value of many figures related to military spending, but there are approximate estimates by various groups.