Spending on Education, Human Capital, and Economic Growth in Central America: A Panel Data Analysis with Driscoll-Kraay Standard Errors

Abstract

The main purpose of this study is to assess the effect of current public expenditure on education and human capital on economic growth in Central America between 1992 and 2021. In this context, data on education spending and human capital for Guatemala, Honduras, El Salvador, Nicaragua, and Costa Rica were analyzed using a panel data approach with Driscoll–Kraay standard errors. The time series were primarily obtained from the online databases of the World Bank, UNESCO, and national public sources. The results show a positive and significant effect of current education expenditure and human capital formation on the economic growth of Central America. This research provides empirical evidence on a topic that has been scarcely examined in the Central American regional context, and its findings constitute relevant input for scholars, practitioners, and policymakers.