Global military spending totalled a record $1,464bn in 2008, an increase of 45% on figures released a decade ago according to the Stockholm International Peace Research Institute (SIPRI).
The US represented 58% of the increase between 1999 and 2008 with growth of $219bn, while Russia and China have almost tripled their military spend in the last ten years.
The total figure represents a 4% increase on 2007 figures.
With an absolute increase of $42bn, China is now only second to the US in military spending, according to SIPRI's yearbook on armaments, disarmament and international security.
Other countries such as India, Saudi Arabia, Iran and the UK also increased their spending and contributed significantly to the total increase, the report said.
SIPRI head of the military expenditure project Sam Perlo-Freeman said the war against terrorism and the operations in Iraq and Afghanistan have encouraged countries to invest more in their national militaries.
The number of international peace operation personnel deployed last year also reached a new high, with a record 187,586 serving on peace missions – an increase of 11% since 2007. But missions in sensitive areas like Darfur and the Democratic Republic of the Congo required more strength, the report said.
According to SIPRI, there are about 8,400 nuclear warheads globally and almost 2000 of them are on high alert with the ability to be launched within minutes.
In addition, there are around 23,300 nuclear weapons in the arsenals of eight countries that include the US, Russia and China. Other members are the UK, France, India, Pakistan and Israel.
The report also listed the top 100 arms producing companies (excluding Chinese) with US and European-based companies dominating the list.
Boeing was the top arms producer in 2007 with sales worth $30.5bn.