Guatemala’s public spending: Worst in the world?
The World Bank rated Guatemala last in the world in public spending and government revenues and near the bottom in public investment in its 2014 report “Guatemala’s Econonic DNA.”
The graphs above compare revenues, public spending, and social investment as a percent of GDP (a measure of the production of a national economy). In other words, it measures how much of the wealth generated by the Guatemalan economy is spent by the state on public programs. The rankings are out of the countries surveyed.
(As the graphic implies, there is a strong correlation between Guatemala’s government revenue/tax system and low social spending and investment. For more on this, see Guate in Graphs: Taxes.)
Three next three charts from the UN’s Economic Commission for Latin America and the Caribbean (ECLAC) put Guatemala’s levels of social spending and social investment in a regional context.
This graph from ECLAC’s annual Social Panorama report shows social spending per capita, the amount of money per citizen that each country spends on social programs. This sheds light on how Guatemala earned the World Bank’s last place rating.
This next chart from a different 2017 ECLAC report measures government spending on health, housing, education, and social security as percent of GDP.
Guatemala spends less than almost any other country in the region. Guatemala also spends less on healthcare and other health services than any other country listed.
(Purple, Education; Red, Social security; Diagonals, Housing; Pink, Health.)
Another graph from ECLAC’s Social Panorama report shows public investment as percent of GDP. Public investment is different from the social spending shown in the previous graph. It refers to spending for the future, such as on roads and other infrastructure, while social spending refers to regular continuous spending, like on teachers’ salaries, welfare programs, or electricity subsidies.
In both categories, social spending and public investment, Guatemala spends less than almost every other country in the region.
(The uneven distribution of Guatemala’s social spending, between urban and rural areas and indigenous and non-indigenous areas, for example, is addressed in Guatemala in Graphs: Inequality.)
The next two Social Panorama report charts measure spending on social security (support for retired workers) and welfare (anti-poverty) programs over time. The first uses a percent GDP measure and the second a per capita measure. Again, Guatemala spends less than almost every other country. Only Honduras appears to spend less.
It’s important to compare percent of GDP data with per capita data. Note that Panama spends about the same amount as a percent of GDP, but much more on a per capita basis. Guatemala spends 1.4% of GDP on social security and welfare programs, and Panama spends 1.3%. But Panama’s spending amounts to $124 per citizen, while Guatemala’s amounts to just $43.