ABSTRACT
The role of public expenditures in the development process remains an area that few economists and other social scientists have endeavord to explore. Especially lacking has been a systematic format for analyzing the effectiveness of public investment in human resources within developing countries of South America. 1 In a recent overview of Latin American expenditure policy. Musgrave criticizes UN budget accounts for excluding investment in human resources from their concept of public capital formation and argues for increased investment in human capital to improve the skills of low income groups. 2 While the extent to which education causes economic growth is currently open to some debate, 3 Musgrave maintains that in Latin America:
Available resources are too limited in many cases to sustain both redistribution and growth policies. The solution, therefore, has to be through a redistribution-oriented growth policy. This is of importance especially with regard to investment in education and health. 4
