Identifying the need for an indicator to quantify an economic system’s efforts to be efficient: A State-of-the-Art Analysis

While the comprehension of an economic system has improved over the years, there is still much to be learned about hidden phenomena that shape a country’s economic performance. A plethora of leading, lagging, and coincident type economic indexes are now available in the econometric toolbox that fulfill several traditional economic requirements like measuring economic growth, inflation, and unemployment. In addition, there are recently developed indexes that are designed to measure the hitherto unaddressed dimensions of an economy like quality of life. However, there is a paucity still of indexes that measure how efficient a country’s overall efforts toward creating value through the transformation of supplies into consumable products are. To explore this void in the econometric literature, a systematic literature review is performed based on a widely used methodology known as the ‘State-of-the-Art Matrix’ (SAM). The SAM results confirm the presence of such a lacuna in the economic literature. Also, the current study identifies a combination of two widely used techniques in economics (DEA and Markov Chains) as apposite approaches to address such an identified problem. Finally, two new and distinct indexes are theoretically discussed as the focus of future research.