Efficiency illusive to understand

Comments on Xinling Wang, China Policy "China’s twenty-year dream of SOE reform still unfulfilled", 8/10/2017

Efficiency seems so easy to define in theory yet very hard to really understand.

To illustrate this, consider two extremes in terms of efficiency.

First, the case of China. There have been and still are so many areas in China which are so inefficient, yet its economy has been growing remarkably fast.

Second, the case of the US. Arguably, it has been the leader of free market economies and should generally be very efficient. Yet, it was the source or epicentre of the GFC. Was it efficient in the time leading up to the GFC? One could argue that some parts of the US economy must have been highly problematic in efficiency term in the broadest sense.

It seems, there are still important issues in economic development processes that are still not well understood, notwithstanding that there is mainstream economics and many theories regarding development. There maybe some disconnect between aggregate economy and particular efficiency issues. There does not seem to be a perfectly efficient economy.