The effects of the underground economy on economic competitiviness

Donici, Gabriel-Andrei/GA (2012): The effects of the underground economy on economic competitiviness.

Abstract

A real, almost palpable, connection exists between the official and the underground economy. More than that, both sides of the economy (official and underground) are connected with the competitiveness of a country. Strangely a large presence of undereground in the economy is a sign of competitiveness. Although we would be tempted to say that underground is bad for competitiveness the reality is that due to taxes and regulations the resources (especially the human ones) used ”illegaly” would probably be wasted. In the end the wages from the underground economy return to the oficial one suporting it and hence the competitiveness of the country.

• Item Type: MPRA Paper
• Language: English
• Keywords: official economy; underground economy; illegal activities; tax evasion; economic competitiveness
• Subjects: E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E26 - Informal Economy ; Underground Economy; H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H26 - Tax Evasion and Avoidance

References

Ballon, D., Kwan, J., Pastore, C. (2009) Voices from the Underground Economy: The Experiences of Workers and Advocates Seeking Meal and Rest Breaks in Low-Wage Industries, Bet Tzedek Legal Services, Kevin Kish.

Dabla-Norris, E., Feltenstein, A. (2003) An Analysis of the Underground Economy and Its Macroeconomic Consequences, IMF Working Papers, WP/03/23.

Reyneri, E. (2003) Illegal immigration and the underground economy, National Europe Centre Paper No. 66.

Sennholz, Hans F. (1984) The Underground Economy, Ludwig von Mises Institute.

Schneider, F. (2000) Dimensions of the Shadow Economy, The Independent Review, v.V, n.1, ISSN 1086-1653, Copyright © 2000, pp. 81–91.

Tanzi, V. (2002) The Shadow Economy, Its Causes and Its Consequences, prezentată la “International Seminar on the Shadow Economy Index in Brazil,” Brazilian Institute of Ethics in Competition, 12 March 2002, Rio de Janeiro.

Uzunoglu, S., Yuruk, M.S., Atakisi, A. (n.d.) Underground economy: It is an economic problem a solution?.