Russia and China were among the few nations to increase military spending last year amid the global financial crisis, according to the Stockholm International Peace Research Institute (SIPRI).
In its annual study, the think tank said cuts in military spending in the United States and Europe led to a meager 0.3 percent rise in military spending in 2011.
Last year, six of the world's top military spenders -- Brazil, France, Germany, India, Britain, and the United States -- cut their military budgets.
Russia, however, upped military spending to some $8 billion, a 9.3 percent increase over 2010. As a result, Russia jumped ahead of Britain and France to become the world's third-largest arms spender.
SIPRI said the main reason for Russia's increased spending: plans to modernize 70 percent of the country's Soviet-era weaponry by 2020. SIPRI predicts Russian military spending to continue rising.
China boosted arms purchases by 6.7 percent to around $143 billion.
SIPRI said China's rising military spending is largely in line with the country's rising economic output, with military outlays amounting to some 2 percent of the country's GDP since 2001.
China is still behind the United States, by far the world's largest military spender at $711 billion, despite a cut of 1.2 percent in 2010.
SIPRI said that slight drop in U.S. military spending was due in part to delays in approving the 2011 budget, as the Obama administration and Congress squabbled over how to reduce the country's ballooning deficit.
SIPRI expects U.S. arms spending to continue falling, mainly as a result of the withdrawal of U.S. forces from Iraq, and the drawdown of U.S. forces in Afghanistan.
With Washington outspending Beijing five to one, Sam Perlo-Freeman, a SIPRI analyst, predicts U.S. "military dominance" to continue for the "foreseeable future."
With reporting by AP