In recent years, the term shadow economy is used quite often. And perhaps because of the fact that it is found in a number of negative effects, many feel the shadow economy “new growth” of recent years
The shadow economy -. The activity of business entities, which develops outside state control and accounting. This is a complex socio-economic phenomenon, covering the entire system of social and economic relations, and above all – the uncontrolled reproduction of society sector, where production, distribution, exchange and consumption of economic goods and entrepreneurial abilities are hiding from the government. There are a variety of activities that are opposed to profit economic development, harm to society and create the shadow economy – the economy of deforming and socially dangerous. Identifying these negative entities, their blocking and overcome – an indispensable condition for the full development of society.
Definition, types and factors of shadow economic activity: generalization of research-based review
In economic theory, so far there is no prevailing understanding of the role of the shadow economy in the overall economic system. On the one hand, the underground economy is a problem for the state, since it is not controlled and it does not pay taxes. On the other hand, it often serves as a means of preserving the business that went bankrupt in the event of full payment of taxes. Therefore, to understand the foundations of the relationship of formal and the informal sectors of the economy must be a fundamental study of the phenomenon of shadow economy in today’s market, its role in the reproduction process, as well as its functioning. This will improve the efficiency of state regulation of economic activity. In this case, a greater role for the construction of a good research methodology plays an adequate definition of the shadow economy and its types.
The range of causes of the shadow economy wide enough. However, you can select the most relevant ones: Tax burden and as a result of the avoidance of payment of income tax, value added tax or other taxes; Social security costs and the avoidance of the payment of social security contributions; Labor market regulation and avoidance of compliance with certain legal labor market standards such as minimum wage, maximum working hours, safety standards, etc .; Density and intensity of regulations in the official economy; Poor civic participation, lack of loyalty and respect for public institutions; Inability to pay taxes; Ineffective implementation of regulatory measures and the high corruption.