RELATIONSHIP BETWEEN PUBLIC EXPENDITURE AND THE GROWTH OF THE SALVADORAN ECONOMY, DURING THE PERIOD BETWEEN 2009 AND 2020

Abstract

Technically, the progress of an economy is measured according to its relationship with its gross national production of goods and services, in Latin America according to data from (ECLAC, 2021), in the last decade after the great mortgage crisis in the United States that was unleashed in 2009, the economic growth of the Latin American economies has had quite pronounced and interesting ups and
downs, going through 6.1% growth in 2010, also by -1.2 of the year 2016 and of course until reaching -6.8 of the year 2020; To reach this indicator, each country carries out specific public policy actions in the economic field.
In this context, the Salvadoran economy has also suffered these changes in the rate of economic growth. The smallest country in Central America, it has experienced modest economic growth in recent decades, with annual GDP growth exceeding 3 percent only twice between 2000 and 2020 (only in 2006 at 4.3% and 2011 at 3.8). %) (World Bank, 2022). And where the economy for years has been fairly supported by family remittances from abroad that have come to contribute up to 20.3% of GDP according to official data from the Central Reserve Bank of El Salvador.
This research aims to publicize and analyze the type of relationship between public investment made by the government and GDP growth in El Salvador in the last decade.
To achieve this objective, official information will be taken on the investment made by the Salvadoran government in capital transfers and investment in infrastructure (public spending), in the years between 2009 and 2020 (warning that this last year is atypical due to the pandemic). COVID-19), and contrast it with the percentages of economic growth that the country has presented in the same period; This will be related to notions of studies carried out by different economists on endogenous growth and the potential of economies to grow through investment and not savings.
This study concludes with a series of public policy recommendations with potential practical implications to make the country's economy one of the fastest growing in the region.