The global military expenditure rose by 3.7 per cent in real terms in 2022 to a record high of $2.24 trillion (Tian et al., 2023). The United States, China and the European Union (as the aggregated national expenditures of its member countries) make up the three largest (see first chart). Given the rising demand, governments and the defence industry are increasing their investments. Evaluating the strengths and weaknesses of each market will be essential in determining the necessary steps forward.

For this reason, this Info Flash aims to compare the investment climates in the markets of the largest spenders. An investment is regarded as an ‘act of putting money or effort into something to make a profit or achieve a result’ (‘Investments’, 2023). An investment climate is the extent to which countries or trading blocs can attract domestic and foreign investments. While the investment climate consists of various components, such as the insurance system and social risks, such variables will not be discussed at length.