Problemi Ekonomiki (Jun 2018)
Economic Efficiency: Definition, Analysis of Concepts
Abstract
At the present stage of economic development, there is a certain crisis in studying economic efficiency of performance results. Despite the interest of many scholars and practitioners to investigating the notion and concepts of economic efficiency, there are still many contradictions in its definition. Theoretical aspects of economic efficiency are highlighted in works of C. McConnell and S. Brue, A. Makhmudova, A. Krasnov, V. Kondratov, B. Raizberg, S. Mochernyi, and others. The aim of the article is to analyze the existing approaches to the definition of economic efficiency in the area of sustainable development of a region. There are several approaches to studying efficiency: “resource-based” approach that provides for the fullest use of scarce resources in order to fully meet the limited needs; “cost-based” approach, which considers the ratio of performance results and costs. The article presents the views of scientific schools on the concept of “efficiency”, namely: representatives of the Classical School consider efficiency as a comparative ratio of production factors to their productivity and resource availability; the Neoclassical School considers efficiency from the point of view of social reproduction quality; according to representatives of the School of General Equilibrium, the basis of countries’ competitive advantages is the prices for goods being less than equilibrium prices, as well as the conditions of countries that provide mutual demand and supply. The equalization of aggregate demand and aggregate supply can be either performed by changing prices with constant quantities, or by changing quantities with constant prices, or by changing quantities and prices simultaneously; representatives of the Institutional and Non-Institutional Schools consider efficiency through the prism of transaction costs; the School of Competitive Advantages considers efficiency as a competitive advantage of the state and business levels. Efficiency is always associated with the ratio of result value to costs value, subjective, individualized assessment of the object and has a final result.
