Chart of the Week: Biden should focus US military expenditure on R&D

Though real US military expenditure has increased by around 60% since the early 1950s, its share of GDP has declined, from a peak of around 14% in 1953 to less than 4% in 2020. There are clear cycles around that trend, each typically lasting around 15–20 years. The current uptick began under Donald Trump in 2017, has been continued by the present administration, and appears likely to accelerate given the situation in eastern Europe and ongoing tensions with China. Ordinarily, military expenditure is a deadweight loss for the economy, but the modern military is far more tech-dependent, implying that increased expenditure is likely to be highly R&D intensive. While state-led R&D may be less efficient than private sector investment, there could still be sizeable productivity spillovers to the wider economy.

Refresh this chart in your browser | Edit the chart in Datastream

Join a growing community of asset managers and stay up to date with the latest research from Refinitiv and partners to help you inform your investment decisions. Follow our Asset Management LinkedIn showcase page.