Quality of Education and Economic Integration in Central America

This paper uses the literature that has shown that the main determinant of the economic growth of Latin American countries is the quality of education, measured as the scores obtained in national or international standardized tests. Based on that evidence, it postulated that in the Central American economic integration scheme, if a given country’s increases it’s education quality, it’s rates of investment and economic growth would increase. The increased economic dynamism in this country would lead to increasing its imports from other member countries and in consequence, would experience more rapid rates of economic growth. Moreover, it is shown that the GDP increases resulting from increases in education quality would be larger when they take place on a Central American basis, that is, when each country increases its education quality simultaneously, than when they occur on an individual basis, a result that can viewed as a regional concertation externality. The paper concludes arguing that it is important that Central American countries increase their education quality to acquire a capacity to grow endogenously.