Technological change and efficiency improvement are important sources of production growth in any economy.
Technological change is defined as a shift in the frontier production function.
Efficiency improvement can be further decomposed into technical and allocative efficiency.
The concept of technical efficiency is based on input and output relationships. Technical inefficiency arises when actual or observed output from a given input mix is less than the maximum possible.
Allocative inefficiency arises when the input mix is not consistent with cost minimization. Allocative inefficiency occurs when farmers do not equalize marginal returns with true factor market prices.
http://www.ifpri.org/sites/default/files/pubs/divs/eptd/dp/papers/eptdp39.pdf
X-inefficiency
http://en.wikipedia.org/wiki/X-inefficiency
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