Why Shadow Economy and Informality Should Be Separated as Concepts: Results and Implications of the Shadow Economy Survey in the Post-Soviet Region (original) (raw)
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Reflecting on the results of the shadow economy survey, as conceptualized by Putnis and Sauka and implemented in Ukraine in 2019 for the first time, the goal of the current article is twofold. First, it offers an overview of the results for the years 2017 and 2018 and estimates the shadow economy in the country at 38.3% of GDP for 2017 and 38.5% for 2018. Second, it suggests possible advantages in the use of direct methods to estimate the level of the shadow economy in a country and explore the motives pushing entrepreneurs to remain in the shadow. The discussion is then framed to conceptualize the distinction between shadow economy and informality. We conclude by suggesting that a better understanding of the entangled relations lying behind the reasons to stay in the shadow can help us better address the issue and propose measures that could help bring business out of the shadow.
The Shadow Economy in Azerbaijan: Size and Causes
SSRN Electronic Journal, 2012
Since the collapse of the Soviet Union, the transition economies of the Commonwealth of Independent States (CIS) have kept one of the negative features of the Soviet economythe informal sector. Despite the shift from command to market economy, the informal sector has proved remarkably persistent, with significant ramifications for policies in areas as diverse as social welfare, taxation and business development. In considering the social and policy impact of illegal activities stemming from the informal economy, it is very important to have accurate and up-to-date information, not only on its size, but also on its nature, distribution, causes and functions. This research paper aims to supply this information and to suggest policy measures to combat the shadow economy in today's Azerbaijan. This research therefore has the following two specific objectives: To determine the present size of the shadow economy in Azerbaijan and to determine its nature and cause.
The Shadow Economy in Azerbaijan Size and Causes, Bayramov.pdf
N o r w e g i a n I n s t i t u t e o f I n t e r n a t i o n a l A f f a i r s ( N U P I ) , 2011
Since the collapse of the Soviet Union, the transition economies of the Commonwealth of Independent States (CIS) have kept one of the negative features of the Soviet economy – the informal sector. Despite the shift from command to market economy, the informal sector has proved remarkably persistent, with significant ramifications for policies in areas as diverse as social welfare, taxation and business development. In considering the social and policy impact of illegal activities stemming from the informal economy, it is very important to have accurate and up-to-date information, not only on its size, but also on its nature, distribution, causes and functions. This research paper aims to supply this information and to suggest policy measures to combat the shadow economy in today’s Azerbaijan. This research therefore has the following two specific objectives: To determine the present size of the shadow economy in Azerbaijan and to determine its nature and cause.
The informal economy in East-Central Europe 1991-1998
2004
Abstract: The informal economy was an essential part of the former Communist economies and is now an important part of the transition economies in Central and Eastern Europe. Many claim that it is growing. This paper will consider the relative size and dynamics of the informal economy in different countries during the course of transition, the forms of participation in the informal economy and its role in economic and political developments in the region. In doing so, it draws upon one repeatedsurvey: New Democracies Barometer (NDB) for the years 1991, 1992, 1994, 1996, and 1998. The paper is divided into six parts: Part 1 introduction, Part 2, the informal economy and economic development, Part 4, the structure of participation in informal economies, or who is participating and how, Part 5 Subjective economic well-being and the informal economy, Part 6 the impact of the informal economy on trust in political and social institutions and upon perceptions of corruption, then in Part 7...
Explaining Cross-national Variations in the Size of the Shadow Economy in Central and Eastern Europe
Cross-national variations in the size of the shadow economy have been variously explained to be a result of: economic underdevelopment (modernization theory); high taxes, public sector corruption and state interference in the free market (neoliberal theory) or inadequate levels of state intervention to protect workers (political economy theory). The aim of this paper is to start to evaluate critically these competing theories by comparing crossnational variations in the size of the shadow economy with the various aspects of the broader economic and social environment denoted as determinants of the shadow economy in each of the theories. The finding is that across Central and Eastern Europe, smaller shadow economies prevail in wealthier, more modern and equal societies and countries with higher levels of social protection expenditure, greater state intervention in the labour market, more effective social transfers and lower levels of poverty. No evidence is, therefore, found to support the neoliberal suggestion that decreasing tax rates, deregulating the economy and cutting back work and welfare expenditure by the state will reduce the shadow economy. The paper concludes by discussing the theoretical and policy implications of the findings.
Journal of Economy and its Applications, 2012
To evaluate critically the competing explanations for the persistence of the informal economy that variously represent this sphere as a residue, by-product, alternative and/or complement to the formal economy, this paper reports a survey of livelihood practices in 313 Moscow households. The finding is that the majority of households primarily depend on informal work to secure their livelihood and that although each and every theorisation is wholly valid with regard to particular types of informal work and/or specific population groups, no one 23 articulation fully captures the diverse nature and multiple meanings of the informal economy in contemporary Moscow. The paper concludes by calling for informal work to move more centrestage in studies of post-socialist economic transition and for a wider re-evaluation of its multilayered and multifarious relationship to formal work in other contexts.
The informal economy in eastern Europe: The example of the Ukraine
Economic Bulletin, 1997
It is generally doubted whether the official statistics on the decline of GDP in the successor states to the Soviet Union since the start of the 1990s paint a true picture. These doubts have been substantiated by direct observation and by the large number of statistical inconsistencies. In a number of countries-and particularly in the Ukraine-the decline in employment has been far greater than the rise in unemployment and in the number of pensioners. A further source of doubt is the fact that in most of the successor states the consumption of electricity has fallen far less than the official GDP. Moreover, the official statistics of many CIS countries record sharp real growth of imports and exports despite the decline in real GDP. Last but not least, cash holdings have increased in many countries as a proportion of the money supply. One possible explanation for all these developments is the growth of the unofficial sector within the economy. By its very nature any estimate of the size of the unofficial economy is highly uncertain. In this report a number of approaches used to determine inofficial income are presented, taking the Ukraine as an example, and conclusions for economic policy are drawn from them. According to rough calculations, informal economic activities amount to around 50% of official GDP. Various estimation approaches for the Ukraine Surveys Since 1993 the World Bank has conducted surveys of Ukrainian private and state-owned firms and private households on the unofficial economy. 1 In these surveys private companies put their unofficial value-added-i.e. that not covered by the statistics and not subject to taxation-at between 47% and 59% of total value added in the years 1993 to 1995. On this basis, unofficial activities t The informal economy is defined here as those activities considered in national accounting terms to be value added but which are not covered in the official statistics and the taxation system. For details see Daniel Katffmann and Aleksander Kaliberda, "Integrating the Unofficial Economy into the Dynamics of post-Socialist Economies: A
Analysis of the Main Determinants of the Shadow Economy Based on Selected Countries of Central Asia
Russian Law Journal
This article focuses on assessing the determinants of the shadow economy in Kazakhstan, Kyrgyzstan, and Uzbekistan from 2010 to 2020. Examining the experience of these countries reveals the full range of problems associated with the shadow economy and its impact on economic growth. One of the objectives of the article was to examine the causes of the shadow economy and highlight the highest-income but most vulnerable sectors of the economy. Three Central Asian countries were selected to determine the importance of some factors on the shadow economy in developing countries. To assess the importance of the factors, data for these countries were collected from www.data.worldbank.org and www.theglobaleconomy.com. Empirical research shows that more than 80% of the size of the shadow economy in these countries can be explained by factors such as the total number of employees, the tax rate as a percentage of commercial profits, GDP per capita and imports of goods and services as a percenta...
The Comparison of the Shadow Economy in Turkey and European Countries
As informal activities are considered as a crime, that kind of activities are being carried out secretly and their detection is difficult in most cases. Along with difficulties in determining the size of informal economy exactly, recently developed models and opportunities to reach reliable data enable making realistic estimations in regard to shadow economy. This study benefits from 11 different studies estimating informality in European countries and Turkey by using physical input, currency demand, DYMIMIC, and MIMIC methods. Common conclusion acquired from these studies is that informality rate in Turkey is higher than EU15 countries and EU13 countries –except for Hungary, Cyprus, Latvia, Croatia and Bulgaria. In addition to the comparison of these data, the reasons of the emergence of informal economy, measuring methods, and policy proposals in order to hamper informality in Turkey are also discussed.