The State, Public Expenditure, and Capacity Building: An Approach

This article examines the role of the state in managing public spending in Peru between 1992 and 1995, emphasizing capacity building from the perspective of Amartya Sen and Joseph Stiglitz’s theory of well-being. The research seeks to classify public spending in a manner more consistent with the objectives of equity and efficiency, as historical spending has been influenced by populist policies that have distorted the use of resources. A classification is proposed that includes access to basic services, support for vulnerable groups, and the development of productive infrastructure. The methodology involves the analysis of disaggregated data on public spending, reflecting the evolution of budget execution. The results indicate an increase in the share of spending in the education and health sectors, with notable growth in the capacity to serve vulnerable groups. This suggests that public policy design should prioritize investment in human and social capital, given its direct impact on the country’s well-being and economic development. (Abstract and audio: Department of Economic Publications)