Latin American defense spending is set to grow from less than $60 billion in 2011 to more than $65 billion by 2014 despite huge cutbacks and effects of economic slowdown in the region, industry estimates said.

Part of the reason for the projected increase is government allocations to modernize outmoded military infrastructures neglected over more than a decade because of budgetary constraints.

Booming commodity exports and cash surpluses have given new impetus to defense spending but the bulk of the new expenditure is geared toward infrastructural improvements, better pay for personnel and pension and social security plans, analysts said. Only about one-third of new spending is likely to go into defense procurements but with variations from country to country.

Recent defense and military trade fairs in Brazil saw increased attendance from both government procurement departments and the region's emerging defense industries, in particular those in Brazil.

Arms sales and defense spending in Latin America went through a downturn during a contentious transition from military dictatorships to democratic rule. Defense spending was frozen in several countries, including Argentina and Brazil, through the early part of democratic transition.

Forecast International, Inc., a U.S. market intelligence provider, earlier predicted defense sales in the region could exceed $63 billion in 2011 and surpass $65 billion by 2014. However, given recent inflationary trends in the region, government analysts said the figure would likely exceed that figure.

Some analysts scaled down projections of Latin American defense spending overall after Venezuelan President Hugo Chavez and Colombian President Juan Manuel Santos edged toward reconciliation after several years of a tense standoff between the two countries. The Colombian-Venezuelan tensions were seen behind several billion dollars of Venezuelan military purchases from Russia and stepped up U.S. assistance to Colombia.

Colombia has been fighting a multi-pronged guerrilla movement in which Bogota previously implicated Venezuela, a charge denied by Chavez. The guerrilla movement is suspected of continuing alliances with organized crime, which is seen behind the narcotics trail to North America.

Defense procurement in Latin America gained momentum as the guerrilla movements spread across international borders and struck alliances with other militant groups. Paraguay is the latest country to be facing renewed guerrilla resurgence and on Oct.10 declared a "state of exception" in two of its northern provinces.

Paraguayan forces are also considering military buildup and defense procurement previously not mentioned as part of the government spending plans.

A Forecast International, Inc. study said amid few external threats in Latin America internal conflict remains the primary driver behind the growing regional arms market. In the region as a whole armed guerrilla groups pose the real peril to regional stability, said the study, as many of the homegrown guerrilla groups are no longer contained within the confines of their own nation and continue to increase in militancy.

"As violence spills over the borders, the governments of Latin America must push for enhanced military capabilities to fight back," said the study. "It is this internal conflict that is driving the long-overdue force modernization for the region."

Recent reports of Middle Eastern terror groups initiating operations in Latin America triggered stepped up security activity. In Argentina, Brazil and Chile demand for personal security and protection among the wealthy and some corporate sector entities also pushed up sales of security products.

Fears of uncontrolled immigration from poor nations to wealthier neighbors and increased smuggling generated demand for defense and security products, including body and cargo scanners.