Showing posts with label economic efficiency. Show all posts
Showing posts with label economic efficiency. Show all posts

Friday, February 7, 2014

Marketing and Economic Efficiency Create Societal Improvement

Artwork: Dr. Murad Abel
The bridge between economic growth and government efficiency is not an easy one to find. There are many factors that go into the process of building stronger economies, better societies, and more accountable government. Research by Sirgy, et. al. (2012) helps to show how marketing activities improvement of economic, social, health, and subjective health of a country is mediated by economic efficiency. As marketing activity increases and government oversight becomes more efficient the economy grows for the benefit of all societal members.

Marketing Activity:  The totality of marketing expenditures throughout society that increase awareness of products and services that speed up economic activity (Wilkie and Moore, 2007). This can be measured as dollar amount of advertising expenditures per GDP.  It is tightly woven retailers that fulfill the needs of customer’s life domains that enhance their quality of life. It improves upon information flow, consumption opportunities and improves job opportunities.  

Economic Efficiency:  When a country has lower levels of corruption, more liquidity in movement of money, the informal market is small, and additional employment opportunities it is said to be efficient (Matel et. al., 2010). The overhead transactional costs related to corruption is low while the political structure of the country allows money to move to those who have the abilities to earn it. This translates into efficient opportunities, government oversight, and skill based earning without a significance presence of the shadow market. 

When marketing activity is high, information is readily available, and people can make proper choices the economic activity increases. This economic activity raises the lives of people and revenue throughout an area. To maximize the benefits, government needs to be transparent, build trust, and gain revenue off of transactions.  Low government efficiency can damage economic prospects for business by strengthening the shadow market that seeks to avoid regulation/taxes. 

Measurements for marketing activity include advertising expenditure as a % of GNP and number of retail outlets per capita. Economic efficiency can be measured from the Corruption Perception Index (CPI), Economic Freedom Index (EFI), and shadow economy in % of GDP. Indicators of economic well-being are seen through the measures of inflation, Consumer Price Index (CPI), and GNI as international dollars using Purchasing Power Parity (PPP). Social well-being is measured in adult literacy rates and net enrollment ratio in secondary rules. Health Well-Being is measured in under-5 mortality rates, maternal mortality ratio, life expectancy, and public expenditure on health.  Subjective Well-Being is the subjective satisfaction of society-the happiness factor. 

Through reviewing data of 133 nations the authors found that economic efficiency has a significant impact on societal well –being. Government efficiency is a mediator of this relationship. Societal Well-being is defined as economic, social, health and subjective factors. As economic efficiency increases so does the opportunities and choices of societal members. Trust with the economy and government rises and this encourages greater economic activity that benefits a whole range of societal members across a broad spectrum. 

Comment: The report helps us to understand there are multiple factors in building a strong economy and society. Marketing gets out the “voice” on products and services and provides opportunities for people to understand these products and where they can be obtained. Government oversight can either damage economic growth or encourage it. When officials are in doubt about when to increase or decrease regulation it is beneficial see this through the lens of how this impacts economic growth, societal development and the basic factors of trust that underlines it all. 

Matei, et. al. (2010). Public integrity, economic freedom and government performance: a comparative study for the EU member states and acceding countries. Theoretical and Applied Economics, 18 (11)

Sirgy, M. (2010). Does marketing activity contribute to a society’s well-being? The role of economic efficiency. Journal of Business Ethics, 107 (91). 

Wilkie, W. & Moore, E. (2007). What does the definition of marketing tell us about ourselves? Journal of Public Policy and marketing, 26 (2).