Systemic efficiency beyond income: resource intensity and market orientation

This paper offers a resource-intensity perspective on systemic efficiency. Instead of assessing whether economic systems satisfy the conditions of allocative efficiency, it studies how intensively two primary scarce resources—human time and ecological capacity—are used to generate socially relevant outcomes. Labour-efficiency and environmental-efficiency indicators are constructed for a cross-country sample by relating worked hours per capita and Ecological Footprint per capita to income, the Human Development Index (HDI), its education and health components, happiness, and innovation. These indicators are then related to two measures of market orientation derived from the Fraser Institute and the Heritage Foundation. The results suggest two main findings. First, efficiency rankings depend crucially on the outputs and inputs considered: systems that perform well in labour-efficiency terms for income do not necessarily perform similarly when broader outcomes or ecological capacity are considered. Second, the relationship between market orientation and efficiency is itself heterogeneous. More market-oriented systems tend to show comparatively favourable efficiency patterns when the output is income, whereas for broader outcomes higher market orientation is associated with lower environmental efficiency and with labour-efficiency patterns that are more often nonlinear. The evidence suggests that income growth alone provides an incomplete basis for assessing systemic efficiency and raises questions about some claims associated with green growth.