Empirical Analysis on Public Expenditure for Education, Human Capital and Economic Growth: Evidence from Honduras

Abstract

The objective of this study is to evaluate the relationship between public expenditure for education and human capital on economic growth in Honduras from 1990 to 2020, using the instrumental variables (IV) method, which incorporates the components of public spending on education and human capital, in addition to a set of control variables. The time series were extracted from the World Bank online databases. The results show that there is no correlation between public expenditure for education and economic growth; they also suggest that human capital is not contributing to economic growth, confirming that human capital accumulation is not fully developing. Finally, of the set of control variables considered key by the literature and on which social and economic development depends to a large extent, these would be preventing sustained economic growth, so the government and the population have enormous challenges to overcome.

Keywords

• public expenditure
• education
• human capital
• economic growth