Social Public Spending and the Inequality Trap: A Critical–Institutional Reading of Educational and Territorial Equity in Central America

This article examines why, across Central American countries, higher social public spending is not associated with lower inequality or narrower territorial development gaps, a pattern ECLAC describes as a structural “trap” in which inequality, stalled social mobility, and weakening community ties reinforce one another. A six-country panel (Guatemala, Honduras, El Salvador, Nicaragua, Costa Rica, and Panama) was built from World Bank, CEPALSTAT, and Icefi data for 2015–2024, combining a descriptive cross-country comparison with a critical–institutional reading grounded in ECLAC structuralism, the capabilities approach, and the political economy of fiscal capture. Results show a null correlation between social spending and the Gini index (r = −0.05) and a moderate negative association with poverty (r = −0.62), both descriptive and sensitive to the small number of countries. Honduras and Nicaragua, tied for the lowest per capita educational spending in the panel (approximately US$330 and US$336 in PPP terms, against US$1840 in Costa Rica), also register the weakest HDI outcomes—a pattern consistent with an institutional-architecture explanation or, more parsimoniously, spending volume itself; the descriptive design cannot adjudicate between them. Addressing it would plausibly require institutional and territorial reforms or increased per capita investment in Honduras and Nicaragua, depending on which explanation holds.