Harvey Leibenstein

Harvey Leibenstein (1922 – February 28, 1994) was a Ukrainian-born American Jewish economist. One of his most important contributions to economics was the concept of x-efficiency and Critical Minimum Effort Thesis in development economics.

Harvey Leibenstein has developed the "critical minimum effort thesis". He says that the underdeveloped countries are trapped by the vicious circle of poverty and many other growth detarding factors which keep then in the state of backwardness. So these countries need increase their percapita income to a certain level where they can maintain a self-sustained growth rate. So they need a critical minimum effort, .i.e. investment more than a minimum level to overcome all the obstacles of the underdeveloped countries.

In economics, x-efficiency is the effectiveness with which a given set of inputs are used to produce outputs. If a firm is producing the maximum output it can, given the resources it employs, such as men and machinery, and the best technology available, it is said to be technical-inefficient. x-inefficiency occurs when technical-efficiency is not achieved. The concept of x-efficiency was introduced by Harvey Leibenstein in his paper Allocative efficiency v. "x-efficiency" in American Economic Review 1966.

The concept of x-efficiency is also used in the theory of bureaucracy.

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