Institutional Quality as a Moderator of Education Investment Effectiveness in Latin American Democracies

This study tested whether institutional quality moderated the relationship between public education investment and educational outcomes in five Latin American democracies from 2013 to 2022. Using panel data analysis with interaction modeling, the investigation found that countries with stronger governance structures achieved substantially greater returns on education spending, with high‐quality institutions producing nearly three times the educational impact per unit of investment compared to weak institutional contexts. The analysis of Brazil, Chile, Colombia, Costa Rica, and Mexico confirmed that education investment remained statistically ineffective at the lowest levels of institutional quality while generating robust improvements in countries with strong governance capacity. These findings suggest that policymakers should prioritize institutional strengthening alongside budget increases to maximize educational investment effectiveness.