Military Spending

There are three important countries for which CIA does not provide military expenditure data: Serbia, Ethiopia and North Korea. And of late, the London-based International Institute for Strategic Studies (IISS) does not even provide economic data on North Korea, much less an estimate of military spending.

The 1993 Country Study reported that "The state budget is a major government instrument in carrying out the country's economic goals. Expenditures represented about three-quarters of GNP in the mid-1980s... Defense spending, as a share of total expenditures, has increased significantly since the 1960s: from 3.7 percent in 1959 to 19 percent in 1960, and, after averaging 19.8 percent between 1961 and 1966, to 30.4 percent in 1967. After remaining around 30 percent until 1971, the defense share decreased abruptly to 17 percent in 1972, and continued to decline throughout the 1980s. Officially, in both 1989 and 1990 the defense share remained at 12 percent, and for 1991 it was 12.3 percent with 11.6 percent planned for 1992 ... "

The Marine Corps Intelligence Activity NORTH KOREA COUNTRY HANDBOOK MCIA-2630-NK-016-97 [May 1997] states that "The DPRK remains the world's most militaristic state. It commits roughly 25 percent of its GDP to military spending. Out of every 1,000 people, 40 serve in uniform. By comparison, the ROK spends 4 percent of its GDP on the military and 14 of every 1,000 people serve in uniform."

The U.S. State Department's World Military Expenditures and Arms Transfers (WMEAT), which contained military expenditure figures from 1999, reported North Korea's defense budget as $4.26 billion, or 18.8% of GDP. The IISS Military Balance for 2003-2004 reported military spending of $5 billion or 25% of GDP [this was estimated by IISS and not based on reported data from the individual country].

According to the 2007 Country Profile, "Based on 2006 estimates, North Korea's purchasing parity power was US $40 billion.... In 2002 projected total revenue and expenditures were US $10.1 billion.... The North Korean government announced that the military expenditure for fiscal year 2003 was US$1.7 billion, or about 15.7 percent of the total government budget. However, the South Korean government believed that the figure supporting defense in 2003 was more likely around an estimated US$5 billion, representing 27.2 percent of the gross national income and 44.4 percent of the total government budget."

Other sources claim that North Korea may spend as much as 40 percent of its gross domestic product (GDP) on the military [Bill Gertz, "North Korea Pumps Money into Military," Washington Times, August 3, 2004].