Makroøkonomiske trender : Forsvaret i en makroøkonomisk ramme 1960-2040

Economic analysis plays a pivotal role in the Norwegian defence analysis and for the Ministry of Defence’s short- and long-term resource allocation. This report studies the development of the Defence budgets since 1960 in a macroeconomic perspective, and indicates what consequences past, present and future budget levels may have on the Norwegian Defence structure. During the last 15 years Norwegian Defence budgets have remained remarkably stable between 27 and 30 billion 2004- NOK, paying little attention to changing governments and emerging threats related to terrorism. Following considerable growth in the Norwegian economy, the Defence sector’s share of the gross domestic product (GDP) has dropped from 3.0 % in 1990 to 1.7 % in 2004. The rising GDP has resulted in an increased cost per unit and man year, which with a constant defence budget has not been fully compensated. This has lead to a sharp reduction in the Norwegian Defence’s purchasing power since 1990. A constant real term budget level is considered the most likely scenario also going forward. This will result in a need for continuous transformation and down scaling of the Defence forces.