Effect of public investment in human capital on economic growth in Ecuador, 2000–2023

Abstract

Human capital is a fundamental axis for explaining the dynamics of economic growth, particularly in developing economies such as Ecuador. This study examines the effect of public investment in education and health on economic growth during the period 2000–2023. An econometric log-log model was applied to estimate the elasticity of Gross Domestic Product (GDP) per capita in response to variations in public spending on these sectors. Official data from the Central Bank of Ecuador, the National Institute of Statistics and Census, sectoral ministries, and international sources were used, complemented by specialized literature. The findings reveal a positive and statistically significant impact of both variables on economic growth, with a greater magnitude in the case of health expenditure. Specifically, a 1% increase in health spending is associated with a 0.34% rise in GDP per capita, while a similar increase in education spending generates a 0.11% increase in this indicator. These results confirm the relevance of strengthening human capital investment policies as a sustainable development strategy while highlighting the importance of prioritizing efficiency and quality in public expenditure. It is concluded that social investment, especially in health, not only improves population well-being but also constitutes a driver of productivity and competitiveness in the long term.