A measure of the efficiency of public spending on education: FDH analysis for Latin America

This paper evaluates the efficiency of public spending on education in low-income countries in Latin America, with an emphasis on the Peruvian case. To this end, it applies the non-parametric Free Disposable Hull (FDH) methodology, which allows for a comparison of different countries’ ability to transform educational resources—such as expenditure per student, per capita expenditure, and expenditure relative to GDP per capita—into outcomes measured by literacy rates. The study finds that, although the region showed an increase in the productivity of educational spending between 1980 and 1997, higher spending does not necessarily translate into greater efficiency. In the case of Peru, the results suggest relatively favorable performance in reducing illiteracy, but also reveal limitations in the efficient use of resources compared to countries such as Costa Rica, Paraguay, and the Dominican Republic. The study concludes that improving the efficiency of educational spending requires not only greater budget allocations but also better quality indicators, comparable data, and reforms aimed at strengthening the effective provision of public education.