Shadow Economies Around the World: Size, Causes, and Consequences

Friedrich Schneider, Dominik Enste
2000 IMF Working Papers  
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more » ... bedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Abstract Using various methods (currency demand, physical input (electricity) method, model approach), which are discussed and criticized, estimates of the size of the shadow economy in 76 developing, transition and OECD-countries are presented. The average size of a shadow economy varies from 12 percent of GDP for OECD, to 23 percent for transition and to 39 percent for developing countries. An increasing burden of taxation and social security contributions combined with rising state regulatory activities are the driving forces for the increase of the shadow economy especially in OECD-countries. According to some findings, a growing shadow economy has a negative effect on official GDP growth, and a positive impact of corruption on the size of the shadow economy can be found. JEL Classification: O17, O5, D78, H2, H26 many countries as possible, can be shown. In section 2 an attempt is made to define shadow economy activities and an overview of some empirical results is given. In section 3 we examine main causes of the development of the shadow economy and in section 4 we analyze the interactions between the official and the unofficial economies. Section 5 provides a preliminary analysis of the link between corruption and the shadow economy and in section 6 the various methods to estimate the size of the shadow economy are presented. In section 7 more detailed empirical findings of the size of the shadow economy for developing, transition and OECD countries are shown and finally, in section 8 a summary is given and some conclusions are drawn.
doi:10.5089/9781451844375.001 fatcat:p354q67kh5aufcbty2clzz4vma