Trends of Financing and Development of the Defense Sphere

Abstract

The world leaders in defense financing are the USA, China and Russia. The study of the EU countries was based on taking into account the relationship between the volume of military expenditures and the size of the countries (by population) and the level of their economic development. A comparison of EU countries was made according to the following indicators: GDP per capita (in purchasing power standards); military expenditure per capita. In most EU countries, these indicators are correlated. Exceptions are Ireland, Austria, Malta, Lithuania, Estonia and Greece. The first three countries, having high volumes of GDP per capita, direct significantly smaller amounts of funds (per capita) to finance the defense sector. The opposite is the situation in Lithuania, Estonia and Greece, where military expenditure per capita is quite high compared to the level of their economic development, which is undoubtedly due to their geographical location and predictions of possible threats from their neighbors. Cluster analysis methods were used to compare countries simultaneously for both indicators: agglomerative procedure according to the Ward method; k-means method. The clustering results were the same in both cases. Only Ireland was included in the first cluster. The second cluster contains 11 countries: Sweden; France; Germany; Finland; Lithuania; Belgium; Estonia; Italy; Netherlands; Greece; Denmark The third cluster includes 14 countries: Portugal; Slovenia; the Czech Republic; Croatia; Cyprus; Romania; Hungary; Spain; Poland; Slovakia; Latvia; Malta; Bulgaria; Austria. Ireland forms a separate cluster as the country with the largest GDP and one of the lowest military expenditure per capita. The second cluster is characterized by the largest values of statistical indicators. The corresponding indicators for the countries of the third cluster are the lowest. Innovations are intensifying in the defense sector. Military tech is actively developing in Ukraine. Military startups are divided into two groups: hardware; software. Innovations increase the attractiveness of the defense sector for private investors.