Harvey Leibenstein

Harvey Leibenstein (1922 – February 28, 1994) was a Ukrainian-born American economist. One of his most important contributions to economics was the concept of X-inefficiency and the critical minimum effort thesis in development economics.

Concerning his critical minimum effort thesis, he claimed that the underdeveloped countries are trapped by the vicious circle of poverty and many other growth retarding factors, which keep them in the state of backwardness.Those countries need to increase their per capita income to a certain level in which they can maintain a self-sustained growth rate. They need a critical minimum effort and thus to invest at more than a minimum level to overcome all of 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 that it can with the resources that it uses, such as men and machinery, and the best technology available, it is said to be technical-efficient. X-inefficiency occurs when technical-efficiency is not achieved.

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