Applied Knowledge Management for Solving Defence Spending Vs Sustainable Economy Dilemma

Balancing government spending between defence and social development has been an area of active debate, especially for developing countries like Pakistan, maintaining this balance is crucial. High defence expenditure is often justified by security concerns and regional dynamics, but it does strain national budget and divert resources from essential social services. Pakistan, with its financial dependence on international loans and aid, faces a particularly challenging situation in this regard. The situation has deteriorated a step further from social development to economic sustainability, as now the government has to impose higher taxes on energy and industrial imports for its functioning, but that is resulting in stalling of the economic system. In this peculiar situation, Pakistan needs to explore and reorient its strategic policy alignment to gain maximum returns on the three domains of Defence spending, Social Development and Economic Sustainability.

Table-1: Defence Expenditure Comparison for Selected Countries

Sources: United Nations Department of Economic and Social Affairs. SIPRI Military Expenditure Database (2023)

Defence spending of selected countries is presented in Table (1), Russia, China and USA are selected as they are the leading powers followed by aspiring countries India and UK. The military expenditure by India is 83.6 billion US$ which is much less than the leading three countries but still 2.4% of its GDP. Defence allocation by these countries would make more logic if “Military expenditure” is not viewed in isolation, but rather viewed in parallel with “Trade Balance to GDP ratio” and “Researcher per million populations”. The trade balance to GDP ratio has a dampening impact on military expenditure, as the economy has to support the expenditure ultimately. USA also has a negative ratio of “Trade Balance to GDP” of -3.55 but still USA can strain its economy as it has a much higher number of researchers compared to other countries and USA has a reason to target its performance higher in global knowledge economy.

Considering Pakistan’s geo-political situation and relations with its neighbouring countries, Pakistan cannot neglect its defence capabilities, but history has always taught that super powers have collapsed due to economic burden. Pakistan allocates a significant portion of its GDP to military spending of 2.8%, as per recent data, arguing that this amount is necessary for its national security. Now considering the “Trade Balance to GDP ratio” of Pakistan at negative 13 points, which is not comparable with any of the other countries in the list.

The introducing of higher taxes and increasing energy costs by the government, in order to support governmental functioning, have increased the manufacturing costs of the export sector making their products uncompetitive in international markets. The economy of the country in its present state would not be able to sustain this load and significant structural changes would need to be adopted, if the country plans to achieve its target.

The golden rule would be to follow a path of peace and prosperity for all countries including Pakistan, but the global dynamics do not follow ideal rules. Actively pursuing diplomatic solutions to regional conflicts can reduce the need for high defence spending. Efforts to improve relations with neighbouring countries can lead to a more stable security environment, lowering defence costs in the long run. Implementing confidence-building measures with India and other neighbouring countries can reduce tensions and the risk of conflict.

One strategy for balancing these competing needs is to enhance the efficiency of defence spending. To achieve this, Pakistan should focus on enhancing its asymmetric warfare capabilities. Investing in areas such as cyber warfare, special operations forces, and intelligence provides significant strategic advantages at a relatively lower cost compared to conventional military spending. Enhancing cyber defence and offensive capabilities can protect critical infrastructure and offer a strategic edge over adversaries. Investing in high-quality training programs for military personnel improves efficiency and effectiveness, allowing well-trained forces to achieve more with less equipment. Developing robust professional military education systems cultivates strategic thinkers and leaders who can make the most of limited resources. Developing an indigenous defence industry can significantly reduce reliance on expensive foreign imports. Promoting local production through public-private partnerships fosters innovation and cost-effective manufacturing. Increasing funding for research and development (R&D) can create home-grown solutions tailored to Pakistan’s specific defence needs.

Applied Knowledge Management (KM) frameworks can aid Pakistan in enhancing its performance in all of the above domains. The KM frameworks are being used in USA, Europe and other developed world since long, to collaborate in defence projects in a secured but an integrated manner. As countries move towards high-tech supported warfare the number of knowledge workers needed for the necessary support is increased many folds. A reason for USA to perform so actively in global innovation market is due to its high number of knowledge workers 4,452 per million populations and its ability to map its knowledge resources. Pakistan has nearly two times higher number of researchers per population (Table 1) as compared with India, but due to absence of a KM platform, the intellectual capital of these researchers cannot be synchronized towards specific projects.

One of the most effective KM applications is as a cost reduction strategy, in fostering knowledge collaboration between industry, academia, and the government. By establishing a robust framework for this collaboration, Pakistan can drive innovation and reduce costs through shared resources and expertise. This framework should include regular joint meetings, shared research projects, and funding initiatives that encourage collaboration across these sectors. The government can provide incentives for industry and academia to partner on defence-related projects, ensuring that cutting-edge research is translated into practical applications for national security. Post project studies have shown KM strategies reducing project costs in general by 70% while boosting performance by a still higher factor. Applying KM on bigger projects would result in higher savings. A number of projects in NASA and homeland security are considered by experts as the most successful applied KM initiatives.

By adopting these strategic recommendations, Pakistan can maximize the effectiveness of its defence spending while minimizing costs. Focusing on asymmetric capabilities, modernizing existing equipment, strengthening intelligence and surveillance, developing an indigenous defence industry, enhancing training and professionalism, leveraging diplomacy, optimizing defence spending, and engaging in conflict resolution are key strategies to ensure national security in a cost-effective manner. This approach will allow Pakistan to maintain a robust defence posture while channelling more resources into vital development initiatives.