NEWTOWN, Conn. -- From a global perspective, Latin America does not spend a lot of money on defense. North America, Europe, Eurasia, Asia, and the Middle East all outspend the region. Economic problems brought about by declining commodity prices caused defense budgets to slip even further between 2014 and 2016.
Within Latin America, Brazil has the largest defense budget, typically accounting for about half of all defense spending in the region. Other major spenders include Colombia, Mexico, Argentina, Cuba, Chile, and Peru.
The primary obstacle to defense spending in most Latin American countries continues to be a cycle of economic advances and declines, making it difficult for governments to provide a steady flow of funding for their militaries. In addition, Latin America does not face threats from terrorists or poor diplomatic relations, further reducing the need for large standing armies in the region.
That said, significant threats remain in the region, particularly from drug cartels, gangs, and insurgents. These groups create internal violence that necessitates government action. In order to combat these threats, defense spending in the region will grow at a steady pace between 2018 and 2023. Latin American countries will spend $403.7 billion on defense budgets during that time.
Relatively small defense budgets and open competitions have increased the competitive intensity in Latin America. Companies that want to secure contracts in the region will need to compete with most major aerospace and defense suppliers. Often the winners will be those most willing to exchange industrial offsets, technology sharing, and licensed production for a contract. Latin American governments also often acquire secondhand systems, giving business to companies that can maintain and upgrade older equipment.
Given the region's insurgency and counternarcotics concerns, many Latin American countries are primarily interested in weaponry that can be employed in counterinsurgency, low-intensity conflicts. They are also interested in paramilitary equipment, such as small arms, helicopters, patrol boats, armored vehicles, trucks, and communications equipment, rather than larger systems intended primarily for conventional conflicts, such as fighter aircraft, tanks, or large naval vessels.
The top five defense markets in 2018 are Brazil, Colombia, Mexico, Argentina, and Chile. Combined, these countries spent $50.2 billion on defense, accounting for 82.5 percent of the regional total. Spending in those five countries decreased 4.6 percent from 2017 figures, driven largely by decreases in Argentina and Brazil.