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North Koreans have relied on the shadow economy since the collapse of socialism in the 1990s, but little is known about the degree to which informal markets have influenced the country's everyday politics. Based on a large-scale survey of defectors, as well as interviews with almost 100 defectors, including some who had been high-ranking officials prior to leaving North Korea, this article finds that the shadow economy has elicited many changes. First, informal marketisation has affected social practices in the workplace, such as reduced job attendance, decreased participation in mandatory organisational meetings, and a strengthened public perception that official job allocations are unfair. Second, the shadow economy has spread unfavourable views of the official welfare system, leading people to prefer life in the market to their past reliance on the command economy. Third, the shadow economy has led to rampant corruption, strengthening popular perceptions that officials are corrupt and law enforcement is unfair. Finally, the shadow economy has negatively affected public views of the North Korean regime, decreasing loyalty to the leadership and reducing public trust in political institutions. Despite these social transformations, people remain sceptical about the idea of regime change due to tight social control. [ABSTRACT FROM AUTHOR]

The recent financial crisis caused by corruption and opacity has led us to examine how the informal economy and other factors affect tax revenues using a three-pillar theoretical analysis. Empirical research has not thoroughly explored the shadow economy's impact on direct and indirect taxes, tax revenues, and the central bank's independence from the shadow economy and tax collection. This paper used 2010–2018 data from 129 countries. The shadow economy and tax revenues had a substantial negative relationship. The shadow economy also changed the fiscal authorities' policy mix by reducing direct taxes and increasing indirect taxes. Finally, the central bank's independence mitigated the shadow economy's negative effects on tax revenues. [ABSTRACT FROM AUTHOR]

This study investigates the impact of institutional quality and banking competition on shadow economy for 127 economies for the period of 2005–2017. It further explores if institutional quality/competition shapes the relationship differently between banking competition/institutional quality and shadow economy. This paper uses the system GMM estimator to tackle potential omitted variable bias, endogeneity, and simultaneity issues. The findings suggest that overall, greater competition among banks and stricter institutions in the country reduce the size of shadow economy. Furthermore, impact of competition on shadow economy is even stronger in countries with weak institutions and the impact of institutional quality is greater in lower competitive environment. Only severe competition matters for shadow economy in case of developed countries. To sum up the novel findings of this research, competition and institutions complement each other in reducing the size of shadow economy. These findings are robust to different econometric estimators. The findings carry vital policy implications for the governments and regulators to play their part in reducing the shadow economy. [ABSTRACT FROM AUTHOR]

In this article, we study the long-run effect of the Soviet shadow economy on attitudes toward the market economy and competition in Georgia—a former Soviet republic known for the high prevalence of the shadow economy. We use the density of Soviet-era organized crime as a proxy for the local prevalence of shadow economy and instrument it with agroclimatic suitability for citrus fruits, exploiting the fact that citrus and other subtropical agricultural products were an object of shortage and illicit trade during the Soviet era. We show that the citrus-suitable parts of Georgia have a higher density of Soviet-era thieves-in-law and that survey respondents living in these areas are more likely to report lower preference toward state ownership of businesses and higher appreciation of competition. Higher social legitimacy of private entrepreneurship is likely to be behind these findings: employed respondents in citrus-producing areas rate fairness of their compensation higher than in the rest of Georgia when they have their own business and rate it lower when they work in the public sector. [ABSTRACT FROM AUTHOR]

Purpose: The present research aims at identifying the latent factors that are driving the rise of the shadow economy in Palestine, assesses its magnitude from 1998 to 2021 and investigates the influence that its size has on the financial sustainability of Palestine's public budget. Design/methodology/approach: The researchers employed the multi-indicator multi-causes (MIMIC) model to estimate the size of the shadow economy and investigate its effect on the financial sustainability of the public budget. Economic factors such as direct taxes, indirect taxes, government welfare, government spending and unemployment were considered causal variables, while indicators of financial sustainability included budget deficit, public debt and gross domestic product (GDP). The shadow economy served as an intermediary variable. Findings: Based on the findings, the researchers recommend regulating and formalizing legitimate activities within the shadow economy. Additionally, they suggest promoting investment projects to reduce unemployment rates, lowering taxes on essential goods and consumer items and providing support to local producers in Palestine. These measures aim at addressing the challenges posed by the shadow economy and fostering economic stability. Originality/value: The study reveals that the average size of the shadow economy in Palestine between 1998 and 2021 was 43.80%, fluctuating within the range of 39.92%–46.30%. It further establishes that an increase in direct and indirect taxes as well as unemployment contributes to the expansion of the shadow economy. Conversely, government welfare and spending exert a diminishing effect. Moreover, the study finds that the rise of the shadow economy correlates with an increase in public debt, budget deficit and GDP, indicating a negative impact on the financial sustainability of the public budget. [ABSTRACT FROM AUTHOR]

The shadow economy has emerged as a challenging issue for countries globally, particularly emerging markets. An increased budget deficit prevents the governments from using public expenditure to control the increased shadow economy. This paper examines the effect of government expenditure on the shadow economy and the moderating role of budget deficit affecting this impact for the ASEAN-7 countries from 1990 to 2019. We find that increased government spending is associated with an increased shadow economy in ASEAN countries. Interestingly, the effects of government expenditure on the shadow economy intensify with increased budget deficit in the short and long term. [ABSTRACT FROM AUTHOR]

Reducing carbon emissions is critical to achieving a carbon‐neutral world according to the Glasgow Climate Pact, but production, and thus carbon emissions, must continue to meet the needs of the world's growing population. Minimizing carbon emissions per production, that is, increasing carbon efficiency is one way to support the Sustainable Development Goals. Therefore, studying the determinants of carbon efficiency for China, the largest global polluter, is important for zero carbon goals. To this end, this study examines the effects of the shadow economy, globalization, trade openness and urbanization on carbon efficiency using novel dynamic autoregressive‐distributed lag simulations for China during 1990–2018. The empirical results illustrate that (i) the environmental Kuznets curve (EKC) hypothesis is not valid; (ii) Shadow economy, trade openness and urbanization reduce carbon efficiency and (iii) Globalization enhances carbon efficiency. Based on these results, it is suggested that the Chinese government should combat the shadow economy to increase carbon efficiency, regulate unplanned and polluting urbanization in a green manner, reduce carbon intensity in foreign trade, and benefit from environmental technologies provided by globalization. [ABSTRACT FROM AUTHOR]

The research focuses on bank capitalization and macroeconomic stability, including corruption and the shadow economy. A well-capitalized banking system and a low corruption level are important for maintaining macroeconomic stability and reducing the size of the shadow economy. The paper is aimed at assessing the relationship between bank capitalization and macroeconomic stability, which includes corruption and shadow economy through canonical analysis. The research is conducted on the basis of financial and economic reporting of 35 countries with different levels of socio-economic development during 2010–2021 based on data from the World Bank and the European Central Bank. The main input blocks macroeconomic stability – corruption – shadow economy are characterized. During the research, the following tools were used: – methods of grouping, analysis and comparison in determining the characteristics of the elements of the chain «level of capitalization of the banking system – macroeconomic stability – corruption – shadow economy»; – factor analysis by applying the method of principal components in the selection of statistically significant indicators of the bank capitalization level and macroeconomic stability. The quantitative assessment of the bank capitalization level revealed the following dependencies: there is a strong correlation between return on assets and the level of non-performing loans, return on assets and return on equity. Using the principal components method, the following statistically significant indicators of macroeconomic stability were identified: GDP, Gini index, corruption perception index, corruption control index, and political stability index. Research, based on the canonical analysis, determined that 71.1 % of changes in macroeconomic stability indicators are explained by fluctuations in the level of bank capitalization. The level of non-performing loans has a negative impact on macroeconomic stability, while the volatility of return on assets and return on equity has a greater positive impact on the development of the country’s economy. The obtained results can be used by banks in the development of their resource and management policies, in the analysis of the volatility of capitalization level, by state bodies in the development of national policies of the country’s economic development. [ABSTRACT FROM AUTHOR]

This study examines the nexus between non-performing loans (NPLs) and the shadow economy, as well as macroeconomic and bank-specific variables, in 25 emerging countries from the period starting 1998 to 2017 period. The Driscoll-Kraay standard errors and a fixed effect estimator have been employed, and the results suggest that NPLs have a positive relationship with the shadow economy as well as inflation and trade openness. In contrast, GDP, unemployment, household consumption, credit to deposit ratio, broad money, bank return on equity, and overall economic freedom index have a negative effect on NPLs. Our results demonstrate the complex nature of non-performing loans, which are influenced by both microeconomic and macroeconomic factors. [ABSTRACT FROM AUTHOR]

The study aimed at the championship season on the subject of the study, which is the hidden economy or the informal economy. By focusing on some of the issues in this topic that formed the problem of the study; They are the economic and social effects of this type of economic activity, with a statement of methods for estimating this type of economic practice. The study aimed to draw attention to the reality of this activity in selected countries, with reference to the Arab countries in particular and the developing world in general. In order to achieve the objectives of this study, the analytical descriptive approach was used, with an explanation of the methodologies, methods, and methods that are used to estimate the size of the shadow economy in different countries. The study concluded that the economy is still and whatever positives it presents, it remains a human activity fraught with dangers and has negative effects that cannot be ignored on the formal economy, and this is indicated by the current study. [ABSTRACT FROM AUTHOR]

This article is the first attempt to apply Putnis and Sauka's approach to direct measurement of the shadow economy through a survey of company managers in Central Asia. The results of the survey are used to calculate a shadow economy index for 2017 and 2018 in Kyrgyzstan, and to discuss the difference between direct and indirect methods in calculating the size of a shadow economy. We also propose a distinction between shadow economies and informality in general. While a shadow economy is usually understood to arise as a consequence of underreporting of income, we argue that informality is best understood as the aggregate of non-monetary and non-economic practices used in society. Applying this distinction to our case, we suggest that the origins of Kyrgyzstan's shadow economy are not only economic; rather social and cultural processes have had significant effects. This has implications for policy responses that address shadow economic activities. [ABSTRACT FROM AUTHOR]

Recent studies suggest that shadow economy has several implications for environmental sustainability. However, the relevance of financial development in the nexus between shadow economy-environmental sustainability remains an open question. This study examines the role of shadow economy and financial development in addition to economic growth, trade openness, and urbanization on the environmental sustainability of a panel of 30 African countries from 1991 to 2017. Specifically, the study investigates the effect of these variables on African countries' ecological footprint and bio-capacity. Findings based on the augmented mean group estimator reveal that shadow economy, financial development, economic growth, and urbanization intensify ecological footprint, while trade openness reduces it. Further investigations reveal that shadow economy, economic growth, and urbanization reduce bio-capacity while trade openness increases it. The interactive term of the shadow economy and financial development shows that a strong financial system significantly moderates the adverse impact of shadow economy on environmental degradation. These results persist when common correlated effect mean group is used to re-estimate the models. Furthermore, Dumitrescu and Hurlin's non-causality tests show two-way causality between ecological footprint and shadow economy, bio-capacity and shadow economy, and financial development. Nevertheless, unidirectional causality is found from financial development to ecological footprint and shadow economy, economic growth to ecological footprint, biocapacity, and financial development. Lastly, the policy implications of the results are discussed in line with these economies. [ABSTRACT FROM AUTHOR]

Applying an advance dynamic panel second-generation two-step system generalized method of movement modeling, this study endeavors to bridge the gap in the literature by examining the association between shadow economy and economic stability in multiple countries with a special case of the Kingdom of Saudi Arabia. The study has been motivated by the evidence that the shadow economy is a persistent source of the decline in tax revenue, which is the main source of funds for any economy to run welfare packages for the public. In addition, it also impacts the economy's financial stability and amplifies the losses. Saudi Arabia is selected as a special case given its global significance and participation in the group of the fastest growing economies in the world. Thus, this study finds a negative association between the shadow economy and economic stability in the case of the full sample and a sub sample of Saudi Arabia. In other words, our study supports the point of view of those scholars who claim that the shadow economy is harmful to the economy. Based on the empirical findings, the study recommends that policymakers need to give importance to the shadow economy while formulating economic stability policies in the case of a full sample, especially in Saudi Arabia. Similarly, the robustness of the results is tested using different model specifications and alternative estimation techniques. [ABSTRACT FROM AUTHOR]

Purpose: The purpose of this paper is to analyze the relationship between macroeconomic fundamentals, intuitional quality and shadow economy. Design/methodology/approach: By utilizing data setspanning from 2004 to 2015 of 141 countries, the study has employed advanced panel technique, i.e. Generalized Method of Moments (GMM) method. In order to check consistency of the results, the study also used fixed effect and random effect for robustness. Findings: The study finds that for the full sample, institutional quality has negative effect on shadow economy while macroeconomic fundaments effect shadow economy differently. After splitting the sample into Organization of Islamic Cooperation (OIC) and non-OIC countries subsamples, it observes same influence of macroeconomic fundaments and institutional quality on shadow economy, but the effect of macroeconomic fundaments and institutional quality on shadow economy is less observed for OIC countries. The results are found consistence by using different estimation methods. Originality/value: The current literature has focused on estimating the size of shadow economy and literature linking the macroeconomic fundaments, institutional quality and shadow economy is scarce. Additionally, this study provides the evidence for cross comparison between OIC economies and non-OIC economies. [ABSTRACT FROM AUTHOR]

This article investigates the impacts of global value chain (GVC) participation on the shadow economy size (SES). GVC participation is classified by the source of the value-added in exports, looking both backward and forward from the perspective of a reference country. First, by using a global sample of 33 developed and 23 developing countries during the 2005–2015 period, the empirical results demonstrate that GVC participation has a negative impact on SES. Second, our findings confirm the presence of a non-linear bell-shaped association between backward GVC and SES while forward GVC has a significant increasingly negative influence on the SES. Third, the positive effects of backward GVC on SES are greater for developing countries, while the forward GVC plays a more critical role in reducing SES in developed countries. Finally, in the short term, both backward and forward GVC participation reduce SES, but the effects follow a U-shaped curve. In the long-term, there is evidence on the bell-shaped non-linear relationship between backward GVC and SES in developing countries, and between forward GVC and SES in developed countries. Backward GVC is an effective tool to control the SES of developing countries, while forward GVC is more important for developed countries. [ABSTRACT FROM AUTHOR]

• Role of cash for underground economy is analyzed with a unique dataset for Italy. • An increase in cash use translates into a higher share of shadow value added. • Rising the maximum threshold for cash transactions shifts the same share upwards. • Stricter limits on cash use are an effective instrument to tackle tax evasion. This paper explores the role of cash usage in feeding the underground economy by using a unique dataset that combines, at province level, official estimates of Italian firms' underreporting with data on cash transactions drawn from the aggregate anti-money laundering reports filed to the Italian Financial Intelligence Unit (UIF) by banks. In order to derive causal evidence, we apply two different econometric strategies: an instrumental variable approach and a difference-in-difference approach, which exploits the change in the maximum threshold for cash transactions introduced in 2016, thereby providing a measure of the effect of such policy on tax evasion. We find that an increase in cash usage translates, other things being equal, into a higher level of underreporting by firms, and that raising the cash threshold in 2016 – a measure motivated by the objective of boosting spending – had the side effect of leading to a larger underground economy. [ABSTRACT FROM AUTHOR]

This paper aims to analyze the effect of information and communication technology (ICT) diffusion on the shadow economic activities in Africa for the period from 2000 to 2015. To this end, we use a panel data model on a sample of 48 countries. The results obtained show that the diffusion of ICTs, especially mobile telephony and the Internet, negatively and significantly affect the size of the shadow economy in Africa. The level of education, capital stock, economic growth, and financial development also contribute to reducing the size of the informal economy in Africa. However, our results suggest that informal activities are motivated by the abundance of natural resources and migrant remittances. Robustness checks are done through the system generalized method of moments and a change in the measurement of the shadow economy confirms the validity of the results. We recommend to decision‐makers to implement public policies facilitating the access and the use of new telecommunications tools and services and to improve the institutional framework to encourage private economic agents to invest in formal activities. [ABSTRACT FROM AUTHOR]

This study focused on the relationship between good governance and the shadow economy in Nigeria from 1996 to 2020. Employing the autoregressive distributed lag modelling approach, the study found that only the regulatory quality index was found to be consistent in taming the size of the shadow economy in Nigeria in both situations. Other indicators, such as the control of corruption, government effectiveness index, political stability index, and perception of the rule of law, had a short-run desirable impact on the shadow economy but portended serious boosters to the prevalence of shadow economic activities in the long run. This points to the prevalence of very weak institutional quality. The Nigerian government should improve more on its legislative quality to consolidate on the gains of regulatory quality. Again, the need for willful desire and action of all Nigerians to build stronger institutions to lay a solid foundation for an enduring system. [ABSTRACT FROM AUTHOR]

Purpose – The study aims at estimating the shadow economy (SE) using the method of demand for currency in Palestine for the period 2008–2018 by studying the relationship between a group of variables that affect the ratio of money traded outside the banking system to the money supply in the broad sense. Design/methodology/approach – The study has adopted analytical and descriptive research methods to estimate SE in Palestinian territories. The data has been obtained from the inflation reports issued by the Palestinian Monetary Authority for ten years, from 2008 to 2018. A standard model was constructed using EViews version 8 for statistical data processing after converting the annual data to quarterly data. Findings –The authors demonstrated that the size of the SE in Palestinian territories has varied over time, and the annual average of its size during the study period reached about $1764.893 (in millions). This amount constitutes about 15.5% of the gross domestic product. The study provides recommendations for reducing the size of the SE in Palestinian territories. Practical implications – The current study shows that shadow economics could significantly matter for economic policy design by policymakers. Originality/value – This study deals directly with Tanzi’s “estimation of shadow economy in Palestinian territories” concept and its impact on economic policies. [ABSTRACT FROM AUTHOR]

How do the electoral institutions in authoritarian regimes affect the development of the shadow economy? While understanding the determinants of the shadow economy is important for the study of political economy and development, little is known about the political determinants of the shadow economy. We argue that authoritarian governments reduce the size of the shadow economy through legislatures. Electoral institutions allow regimes to strengthen their claim to performance legitimacy as they need to cater to a larger winning coalition. This results in increased spending on domestic socio-economic policies that effectively reduce the size of the shadow economy. Using panel data of 54 authoritarian regimes between the years 1991 and 2010, we find authoritarian regimes with electoral institutions have a significant, negative effect on the size of the shadow economy. This study has important implications for understanding the determinants of the shadow economy as well as the effect of political contestation in authoritarian regimes. [ABSTRACT FROM AUTHOR]

• We examine the nexuses between financial inclusion, shadow economies and economic growth of developing economies. • We conclude that financial inclusion has positive and significant impact on economic growth. • The results of the study also suggest that the size of shadow economy in developing economies reduces economic growth. • The study recommends the financial inclusion as a tool, while targeting the economic growth in developing economies. This study explores the impact of the financial inclusion and size of the shadow economy on the economic growth of developing economies over the period 2008–2017. The data for the endogenous, exogenous and control variables were collected from the World Development Indicators, the International Monetary Fund's (IMF) Financial Access Survey (FAS) and Medina and Schneider's global database (2019). The study applies a panel ordinary least square (OLS) fixed effect, a two-step difference generalised method of moments (GMM) and panel Granger causality approach. The results reveal that financial inclusion has a positive and statistically significant impact on economic growth; while in developing economies, the size of the shadow economy has a significant negative impact on economic growth. The findings remain robust to alternative econometric estimations. The asymmetric results in different countries provide practical insights for governments, policymakers and regulators. [ABSTRACT FROM AUTHOR]

This article summarizes the arguments and counterarguments within the scientific discussion on improving public administration tools in the context of implementing innovative mechanisms for combating shadow financial transactions. The main purpose of this research is to formalize innovative strategies to counter the shadow withdrawal of capital with the participation of financial intermediaries. The systematization of scientific sources and approaches to solving the problem of the de-shadow economy proved that a characteristic feature of the functioning of the shadow market is the active participation of financial intermediaries in shadow operations. The information base is data from the World Bank and the Organization for Economic Cooperation and Development, the Group for the Development of Financial Measures to Combat Money Laundering, Transparency International, and the World Economic Forum. The period of the study is 2003-2021. The EU countries, Ukraine, Moldova, and Montenegro, as candidate countries for EU membership, were selected as the object of the study. This study applied the methods of bibliometric analysis to generalize the existing scientific work on the investigated issue, analysis of changes in the number of search changes on the problems of shadowing the economy, and clustering regions by the number of search queries on the shadow economy. Intellectual data analysis methods (one-dimensional branching CART and agglomeration methods) were used for clustering countries depending on the nature of the policy of countering the shadowing of the economy. Based on the results of the bibliometric analysis, theories describing the shadow economy, in particular: innovation theory, the theory of centralization, and institutional theory, were summarized. The article presents the results of cluster analysis, which proved the practicality of selecting three clusters of countries: cluster 1 -- Cyprus, Czech Republic, Denmark, Finland, Greece, Ireland, Italy, Luxembourg, and Portugal; cluster 2 -- Bulgaria, Croatia, Estonia, France, Malta, Netherlands, Spain, Sweden, Belgium, Greece, Austria, Hungary, and Slovak Republic, Slovenia; cluster 3 -- Lithuania, Latvia, Romania, Poland, Moldova, Montenegro, and Ukraine. The study empirically confirmed and theoretically proved that the entire set of innovative scenarios for implementing economic de-shadowing policy could be divided into three types (evolutionary scenario, sequential transformation scenario, and forced scenario). The above scenarios depend on the speed of change in the indicators of developing the shadow economic sector and their sensitivity to the implemented measures. [ABSTRACT FROM AUTHOR]

We investigate the relationship between digitalization and the shadow economy in 42 African countries using unbalanced panel data from 2003 to 2016. We begin by drawing on modernization theory to hypothesize that digitalization efforts in African economies represent an augmentation of public service delivery as well as a channel through which the size of the continent's informal economic activity might be reduced. We employ the fixed effects estimation technique as its baseline estimator while correcting for potential endogeneity concerns using an instrumental variable two‐stage least squares technique. We show compelling evidence that digitalization is associated with a decrease in the size of the shadow economy in Africa. However, evidence of a larger influence is driven by the availability of telecommunications infrastructure and the expansion of government online services. These findings suggest that policymakers should invest more in digital technology to formalize Africa's hidden economic activity, particularly to fill the post‐COVID‐19 financing gap. [ABSTRACT FROM AUTHOR]

The shadow economy is a significant factor in impoverishing the economies of countries and unequal operating and competitive conditions distort the market economy system, as opaque parallel activities impoverish socially responsible business units. The biomass energy sector faces this risk because the biomass supply chain is not yet fully secure and balanced. The study conducted by the authors showed that the manifestations of the shadow economy in the biomass energy sector are possible in the biomass production and transportation sub-sectors. Lack of digitization and poor resource management can lead to the problem of misuse of resources, which has non-transparent economic activities. The evaluation methodology developed by the authors allows to investigate the directions of shadow economy in the biomass energy sector and to measure the possible extent of such activities. The measurements were made in order to compare the official activities of enterprises with the factors attributable to the shadow economy. This is also due to the lack of innovation and digital solutions. The application of innovative solutions would help to reduce the size of the shadow economy, which would increase the income of regions and the state, and reduce the level of poverty. [ABSTRACT FROM AUTHOR]

The study examined the dynamic link between institutional quality, financial inclusion and the informal economy in Nigeria. These were with the view to examining the institutional influence of financial inclusion on the development of informal economy. Annual data covering the period 1991 to 2020 were used for the study. The study made use of Autoregressive Distributed Lag (ARDL) as the technique of estimation. The study found a long run association between the variables and also reveal that financial inclusion and institutional quality directly has a negative but significant effect on shadow economy in Nigeria. This reveals that the development of financial sector as well as quality institutions aids formal sector participation as against the informal sector thus a decrease in shadow economy size in Nigeria. The effect of the interaction of financial inclusion and quality of institution on shadow economy is also found to be positive and significant meaning that weak institution quality has its toll effect on financial inclusion and which result to growth in informal economy in Nigeria. The study concludes that quality of institution in Nigeria is weak and must be improved to favorably promote financial inclusion and successfully mitigate the effect of shadow economy in Nigeria. Therefore, reforms and policies that are required to improve transparency and accountability at all levels of governance as well as improvement in financial system are hereby recommended for policy makers. [ABSTRACT FROM AUTHOR]

• We reconsider deep determinants of inflation, using a more comprehensive set of political and economic structure measures. • We control for the natural resource sector that has been overlooked in the inflation literature. • The natural resource sector, the shadow economy, and political instability are important contributing factors to inflation. • Political systems that are more democratic tend to have lower inflation. • Our findings suggest that the natural resource sector and shadow economy should receive increased attention in assessing the causes of inflation, along with the usual focus on political structure. Theories of inflation emphasize different aspects of economic and political structure as the root causes of inflation. We reexamine these root causes, including two aspects of economic structure that have received no or little analysis in this context: the natural resource sector and the shadow economy. Using a large panel data set and a more extensive set of explanatory variables, our main findings are that higher inflation is associated with an increase in the size of the natural resource sector, the shadow economy, greater political instability, and less democratic political systems. These results also hold for subsamples of developing countries. The consistency in finding that the natural resource sector and shadow economy are determinants of inflation suggest that these aspects of economic structure should receive increased attention in assessing the causes of inflation, along with the usual focus on political structure. [ABSTRACT FROM AUTHOR]

This study explores the link between financial development and the shadow economy in 45 African economies from 1991 to 2019. While overall financial indices show no clear impact on the shadow economy across the entire sample, a nuanced pattern emerges when considering income groups. In low-income countries, financial institutions' index significantly amplify the shadow economy, whereas in lower middle-income nations, broader financial market measures independently contribute to its expansion. This reveals a heterogeneous relationship between financial development and the shadow economy in Africa, emphasizing the income-specific dynamics influencing these interactions. • There is a heterogeneous relationship between financial development and shadow economy. • The income-specific dynamics influencing these interactions. • Financial development indices exert no discernible impacts on the shadow economy. • In low-income countries, financial institutions' index amplify the shadow economy. • In lower middle-income nations, financial market measures contribute to its expansion. [ABSTRACT FROM AUTHOR]

In this paper, we assessed size of the shadow economy for 198 prefecture-level cities in China from the years 2000 to 2018 using a method called MIMIC, which stands for multiple indicators and multiple causes. The goal of the paper is to investigate temporal-spatial characteristics of evolution in the shadow economy. The results manifest that percentage of the total commerce that is hidden from view all over China first increases and then decreases over time, with an average of 17.08 %. The increase in taxation will likely trigger a massive expansion in the business conducted in the shadows, while the increase in government regulation and self-employment rates all have produced negative effects on it. The locations that have a significant amount of unreported economic activity are basically centralized in southeast coastal area, southwest area, northeast of China, and three provinces of central China. Moreover, the difference in shadow economy between resource-based and non-resource-based cities tends to widen gradually after 2013. Cities being too large or too small may face a high proportion of shadow economy. • We measure the size of shadow economy for 198 prefecture-level cities in China. • A high proportion of shadow economy exist in the southwest, northeast, southeast coastal and central area of China. • The difference in shadow economy between resource-based and non-resource-based cities tends to widen gradually. • Cities being too large or too small may face a high proportion of shadow economy. [ABSTRACT FROM AUTHOR]

Measuring participation in undeclared work using surveys has been criticized for under-estimating the level of engagement due to social desirability bias that leads to an under-reporting of "bad" behavior. Until now, few studies have sought to quantify the amplitude of this bias in surveys of undeclared work. The aim of this paper is to fill this gap by using the most appropriate methodologies for estimating the probability of misleading responses in such surveys. Reporting data from special Eurobarometer survey no. 498 conducted in 2019 and involving 27,565 respondents in EU-27 countries and the UK, only 3.5% openly admitted to participating in undeclared work. The results of a Probit model with correction for misclassified cases (i.e., those undertaking undeclared work but declaring that they do not) reveals that nearly a quarter (23.3%) of the respondents undertaking undeclared work refused to openly admit this during the survey, due to the social desirability bias. The estimated overall proportion of undeclared workers is 17.3%. We obtained this value by correcting for both misclassification and the additional source of negative bias due to the large imbalance in the data (i.e., observations in one class are much lower than the other). The outcome of this new advanced approach in analysing undeclared work is that survey estimates can now report its size and determinants in a more accurate manner than has been previously the case. • Respondents hide participation in undeclared work due to social desirability bias. • Current methods have limited validity as estimates of undeclared work. • Novel methodology that estimates the probability of misleading responses. • Nearly a quarter of respondents undertook undeclared work but did not admit it. [ABSTRACT FROM AUTHOR]

The article proposes an innovative methodology and concept for the design and calculation of the Shadow Economy Tolerance Index (SETI), which is without analogue in European or Bulgarian research practice. The need for its construction is related to the fact, established in previous studies on the shadow economy, that there is a tendency among the Bulgarian population to view deviant economic behavior as acceptable, as the “new normal”, and that nearly two thirds of Bulgarians apply various models of deviant (shadow) economic behavior. In structural terms, the SETI Index is to comprise three components, each of which includes 10 indicators: Component 1. Basic notions and attitudes towards the shadow economy; Component 2. Psychological readiness to take part in shady practices; Component 3. Level of real involvement in shady practices. Each of the three components has a different relative weight, namely: 50:35:15. The first calculation of the SETI Index will be made in early 2022 on the basis of empirical data collected in a national representative survey of the population in Bulgaria and will subsequently be repeated every two years. The necessary information will be collected through a specially designed online questionnaire. The questionnaire will be filled in by the same panel of respondents in order to ensure the representative quality of the information. [ABSTRACT FROM AUTHOR]

The use of narcotics in Pakistan is mainly looked at as if it is something isolated from the political games that are played at regional and global levels. This research is partially an attempt to explain why this could not be the case. It looks at the connections between regional and global divisions of power relationships to set stage for understanding the flaws in our conception of the menace of drugs and their proliferation in our society at certain moments in our history. The role of shadow economy in this context has also remained under researched. This paper attempted to address these gaps in knowledge that mislead, misdirect our understanding and conception of drugs and their use, as well as affecting our effectively reacting to these social problematics. The conclusions drawn are the way forward for our policy making apparatuses. Pakistan is signatory to a number of bilateral and multilateral pacts and treaties on narcotics control. It also has vibrant national anti-narcotics and illicit drugs prevention policies and various task forces to deal with the menace of use and abuse of banned substances like National Anti-Narcotics Council (NANC), Ministry of Narcotics Control, Inter-Agency Task Force, Anti- Narcotics Force, National Anti-Narcotics Policy. Despite all these efforts, use and abuse of drugs is on the rise. In the present international scenario, especially the FATF related policies, international pressure and procedures, use of narcotics is no longer an isolated incident but rather part of a very huge ensemble of problems for Pakistan to deal with. Legally, there are no barriers to going after the complete eradication of the narcotics in Pakistan. In other words, the problem is not having the required legal and administrative cover to prevent the use, sale, and import of narcotics in Pakistan. There is plenty of cover available to drug enforcement agencies but still the menace of drug control is on the rise. This gives rise to many problematics. Why is it the case that with so much international cooperation the menace of illicit drugs is on the rise? Could this be the result of what international relations theorists refer to as "the shadow economy" which fuels this massive inflow of drugs, appropriately labelled as "Afghan opiates," in Pakistan? What are the bottlenecks that prevent implementation of narcotics control policies? Are there other factors that hamper effective implementation of avowed national commitment against the use and abuse of narcotics in Pakistan? Is shadow economy, that the world has failed to harness, something that Pakistan can tackle with its limited resources? Or are there any capacity issues and double-dealings that leave the strongly worded national commitment against banned substances in the lurch? Answers to these pressing questions have been sought in this paper. [ABSTRACT FROM AUTHOR]

The article discusses the regional aspects of the shadow economy in Bulgaria. The main factors that generate motivation for shadow practices are considered and it is concluded that they operate mainly at the national level. It follows that measures to limit and prevent this phenomenon should be primarily national. However, the article argues that regional policies can also be used in this regard. A moderate fiscal decentralization can help to increase the tax morality which is one of the most slowly changing and most intractable factors generating motivation for the implementation of shadow practices. It is also argued that fiscal decentralization in Bulgaria has the potential to improve other aspects of the economic system. [ABSTRACT FROM AUTHOR]

This paper tests competing hypotheses on the relationship between marginalization and participation in undeclared work. The 'marginalization' thesis views undeclared work as conducted primarily by marginalized populations among which young, unemployed and economically fragile people dominate. A competing 'reinforcement' thesis argues that undeclared work is conducted disproportionately by those in declared jobs and thus that the undeclared economy reinforces, rather than reduces, the inequalities produced by the declared economy. To evaluate who engages in undeclared work and to test these competing theses, data is reported from a 2015 survey of 6,021 randomly selected adult respondents in Bosnia and Herzegovina. Reporting the marginal effects of a Probit regression analysis, the finding is that marginalized groups (the unemployed, younger age groups, those with fewer years in formal education, lower-income households, rural populations and those from poorer regions) are all significantly more likely to participate in undeclared work. The implications for theory and policy are discussed, along with the limitations of the study and future research required. [ABSTRACT FROM AUTHOR]

The object of research is the shadow economy as structural component (invariant) of economic security of state on example of Ukraine. The level of shadowing of Ukrainian economy requires improvement of both: the system of indicators and mechanism of influence on the level of shadowing on the basis of using of fundamental constants of mathematics of harmony and principle of structural harmony of systems. Under research, fundamental provisions and methods of the theory of safety studies, economic theory, theories of systems and structural harmony of systems, institutionalism, transdisciplinary nature were used. The theme of management of the system of economic security of the state is investigated from various scientific positions of classical science. At the same time, practically ignores the theory of synergetic, which is the synthesis of transdisciplinary approach, price approach, classical theory of systems, structural harmony of systems, theory of fractals and attractors and other components of theory of complexity. Obviously, any system has metric characteristics inherent. The most widespread math constant found in nature is the Phidias number (Golden section). Meаsure is the most important component of all and any knowledge, without it any description of processes and phenomena will be incorrect. The law of measures, or the law of proportional distribution with its derivatives can be defined as law of projecting and organizing sustainable systems at all levels of hierarchical management. The structure of the system is the most conservative characteristic of it as opposed to the state of the system. The properties of the system as a whole are determined not only the properties of its individual elements, but also the properties of the structure of the system as whole. They depend on the existence of the system. The existence of the system retains these parameters in the process of adapting the system to external conditions and thus maintains the existence of the system itself. Matching the metric quality system of economic security of the state and obtaining a conclusion on its stability and abilities to self-organization under the conditions of shadowing of the economy can be carried out by comparison. It is carried out using attractors representing a recurrent number of gold sections: 0.500 ...; 0.618 ...; 0.682 ...; 0.725, as well as – distractors: 0.5698 ...; 0.6540 ...; 0.7053. An integral indicator characterizing the state of any system is the relative information entropy by Shannon. Entropy testing of the system (calculation of relative information entropy) is a logical component of the innovative model of system research. [ABSTRACT FROM AUTHOR]

The article deals with study of the relationship between energy consumption and the level of the shadow economy. Based on the comparison of average rates of renewable energy consumption and the shadow economy per capita of EU countries and Ukraine for the period 2005-2016, the authors distinguish clusters of countries by the nature and direction of the relationship between the analyzed indices. The study of these relationships is based on the linear relationship concept between the shadow economy and energy consumption. The EU countries and Ukraine are identified as the statistical base of the study and the assessment period is 2005-2016. The results confirm the hypothesis of the shadow economic activity impact on energy consumption and prove their dependence on the scientific and technological progress in the country. All indices are statistically significant at the level of 1% and 5% and 10% respectively. This research let the authors conclude that it is necessary to take into account the energy consumption volumes in the process of estimating the shadow economy under the influence of innovative technologies and processes. Empirical calculations have proved the high level of the shadow economy in the vast majority of European Union countries, the average value of which is 22%. [ABSTRACT FROM AUTHOR]

The article investigates the causal links between the level of the shadow economy and indicators of social development of 13 European countries. Based on the analysis of research results of scientists, three hypotheses concerning relationship between the analyzed indicators: there is a one-way link between social development indicators and the level of the shadow economy; there is a one-way causal link between the level of the shadow economy and the country's social development; there is a bilateral relationship between the analyzed indicators were tested. Based on the causal analysis the main hypothesis that the increase in the level of the shadow economy is accompanied by a decrease in the level of social development of the country is proved. The purpose of the paper is to analyze the correlation between the level of the shadow economy and the indicators of social development of the country using methods of causal analysis and panel data from 2010 to 2019. Based on comparative analysis of the levels of the shadow economy, share of the population at the level of poverty and share of the population in a difficult financial situation the statistically significant indirect relationship between indicators has been proved. The analysis of the relationship between the level of the shadow economy and the share of personal income tax and social contribution to GDP was made using the Granger test. Reliability established hypotheses and the nature of the relationship between the indicators on the basis of the construction of end-to-end regression (Wald test), regression with fixed individual effects (Brush-Pegan test) and regression with random individual effects (Hausman test) was carried out. Empirical calculations show that it is appropriate to describe the relationships between the level of the shadow economy and the amount of single social contribution, personal income tax and Index of Social Development by using a model with fixed individual effects. All indices are statistically at 5% significant level. [ABSTRACT FROM AUTHOR]

This article uses panel-corrected standard errors (PCSE) estimator and dynamic fixed effects autoregressive distributed lag (DFE ARDL) estimator to examine the influence of the institutional quality and economic integration on shadow economy for a global sample of 112 economies (between 2005 and 2015). Our empirical research shows that the inward foreign direct investment (FDI), trade openness, institutional quality, and shadow economy have bi-causal relationships. Notably, the results show a strong negative impact of institutional quality and FDI inflows but a weaker negative influence of trade openness on shadow economy. There is also long-run cointegration between institutional quality, economic integration with shadow economy, and heteroscedastic effects of these factors in short run- and long run. Especially, trade openness has a negative impact in both short run and long run, while FDI inflows have a negative influence in the short run but it is positive in the long run. Interestingly, the influence of the institutional quality is quite heterogeneous since the control of corruption and the rule of law have a significant negative impact in the short run, while the political stability has significant negative impact in the long run. [ABSTRACT FROM AUTHOR]

Owing to its hidden nature, quantifying the size of the shadow economy is a challenging task. Concealing incomes leads to large negative externalities: market distortions and loss of tax revenues cause immense damage worldwide. The countries in the Central and Eastern Europe-an (CEE) region are in a peculiar situation: their transformation from planned to market economies happened just a few decades ago, thus their corporate sector and institutional background do not have such long histories and deep traditions as in other parts of the world. In this paper, the causes of shadow economy in Central and Eastern Europe are revealed in a cross-sectional model framework by using data of the International Monetary Fund and other global organisations. Structural equation modelling is applied and special attention is paid to factors such as socio-economic development, institutional background, income inequalities, and effective tax rates. The results prove that the CEE region differs from the rest of the world in many aspects of the shadow economy. [ABSTRACT FROM AUTHOR]

Informal or shadow economy and its multiple determinants have gained the attention of economic research, benefitting from a vast body of literature in the field. Even so, the nexus between the expansion of the informal economic sector and institutions, perceived as good practices, has been less explored. If the formal institutional component is easier to quantify in terms of impact determined on the informal economy, things are totally different when emphasizing how the informal institutions cause the auspicious circumstances as to further escalate shadow practices. Starting from such premises, our paper investigates the nexus between informal institutions, traditions, culture, values, attitudes, beliefs, or mentality that define the basic identity of any society and the predisposition of those societies towards shadow economy, applied to the EU -28. In other words, by using a mixed methodological approach based on the cultural dimensions provided by Geert Hofstede and a unique dataset of variables representative for the shadow economy and quality of informal institutions, we employ a cluster analysis and panel data analysis for the EU countries, including the United Kingdom. As expected, the results have fully validated the imperceptible contribution of unofficial institutions to the amplitude and gravity of informal economy, thus affecting the long-term prosperity of the country. [ABSTRACT FROM AUTHOR]

The endeavor to implement the 2030 Agenda of national and international stakeholders became increasingly impetuous, considering the wide range of uncertainties and risks. The new humans-centered development model built on the prominence of environmental and social values seeks to reinforce communities' resilience and mitigate environmental risks, leaving no one behind. For this to happen, solid and effective institutions, the right environmental policies, and a safe statutory labor framework are the sine qua non. In this study, we evaluated the effects of informality, institutional quality, and renewable energy consumption on ecological footprint of two groups of emerging countries from Europe and Asia from 2002 to 2018. Our results by PMG-ARDL approach highlight dissimilarities between the two groups, showing greater heterogeneity. In this sense, informality is found to have positive and significant effects on ecological footprint in the long run in emerging European countries. In contrast, the effect is negative for emerging Asian countries. In the short run, the effects are less critical in the studied countries between the two groups. Institutional quality variables impacted environmental quality differently. In this sense, it is detrimental for policymakers to consider concerted measures to decrease institutional vulnerabilities and reduce the level of the informal economy. The outcome of this study concurs with a complete awareness of the importance of informality and institutional quality to mitigate social and environmental risks conjunctively. • Informality, institutional, and renewable energy have effect on ecological footprint. • We studied ecological footprint in European and Asian countries from 2002 to 2018. • Informality positively affects ecological footprint in emerging European countries. • The effect of informality is negative for the emerging Asian countries. • Institutional quality differently impacts environmental quality. [ABSTRACT FROM AUTHOR]

A country's competitiveness depends primarily on its economic development which in turn is affected by a number of factors. Some of these, such as investment, favorable business conditions, legal environment, etc., promote economic development, while others, such as low labor productivity, insufficient staff qualification that fails to meet the requirements of the labor market, etc., slow down the pace of economic development. The latter category describes the phenomenon of the shadow economy (SE). Research into shadow economies is dominated by the analysis of the local impact factors. Nevertheless, the results of such analyses do not reveal the general patterns of the shadow economy, without the knowledge of which it is difficult to develop effective preventive measures. The basic determinants of the shadow economy must first and foremost reflect national economic development, as these particular determinants have the most significant impact on the size of the phenomenon of the shadow economy. National economic development can be expressed by employing various indicators, but recently it has most commonly been expressed by GDP per capita. GDP reflects national competitiveness, integrates a number of domestic factors, and is easily accessible and publicly available in national and international statistical sources. In addition, this indicator is calculated by employing a unified methodology, which makes it universal, allowing the comparison of countries in different situations. As presented in this article, the analysis of the relationship between economic development and the size of the shadow economy allows the division of all the EU member states into characteristic groups by the level of their economic development as well as size of the country's SE. Our research attempts to reveal the regularity of the above-mentioned relationship: the higher the level of national economic development, the lower the size of the shadow economy. [ABSTRACT FROM AUTHOR]

This article generalises arguments and counterarguments within the scientific discussion regarding the determination of the influence of illegal economic activity and expansion of the shadow economy on innovative country development. The systematisation of the scientific works on the above problems proves that there is no one no complexity and unity in the above-mentioned scientific findings, which, in turn, demonstrates the necessity of further theoretical and empirical search in this sphere. Thus, it was developed a scientific hypothesis about the negative influence of the shadow economy on innovative country development. In order to test this hypothesis it was developed a scientific and methodological approach that consists of several stages: 1) correlation analysis in order to eliminate multicollinearity problem between control variables; 2) analysis of dataset descriptive statistics; 3) running Hausman test in order to clarify specification of the regression model (fixed or random effects model); 4) realisation of the panel data regression analysis for the whole country sample and separately for Ukraine, characteristics of its results. Technically all stages of the research are realised with the help of Stata 12/S.E. software. The country sample consists of 9 countries (Azerbaijan, Estonia, Hungary, Latvia, Lithuania, Poland, Slovak Republic, Slovenia, and Ukraine). Time horizon - 2008-2018. Running of the panel data regression analysis (model specification - with fixed effects) allow confirming research hypothesis for the whole country sample (an increase of shadow economy negatively affected innovative country development: an increase of shadow economy to GDP ratio in 1% leads to the decrease of the Global Innovation Index in 0.5 points). However, it was not proved for Ukraine separately. It leads to the conclusion that innovative development in Ukraine does not highly dependent on the shadow economy scale because of more significant obstacles on the way on innovation adoption (institutional inefficiency, regulatory drawbacks etc. [ABSTRACT FROM AUTHOR]

The article focuses on the study of causal links between the level of innovation development and the shadow economy on the example of 10 European countries. Based on the analysis of existing approaches to determining the level of innovation activity in the country, a linear model for evaluating the Complex Innovative Activity Index is proposed. The main hypothesis of the paper was the assumption that the increase in the level of the shadow economy is accompanied by a decrease in the country's innovative development, deteriorating access to financial resources, and so on. The purpose of the paper is to analyze the correlation between the level of the shadow economy and the indicators of innovative development of the country as components of its macroeconomic stability using Panel data analysis from 2007 to 2018. Unlike previous studies, this research considered that level of innovative development increasingly depends on the level of the shadow economy. The results confirm the relationship between factor and result indicators for all analyzed countries. To test the hypotheses about the negative impact of the shadow economy on the level of innovative activity of the country was presented the linear model with Complex Innovative Activity Index as an integral indicator of 8 international indexes (Global Competitiveness Index, Digital Readiness Score, Digital Economy and Society Index, Knowledge Economic Index, The European Innovation Scoreboard, Bloomberg Innovation Index, The International Innovation Index, Global Innovation Index) characterizing the level of innovative development of the country. In the second stage: testing of the data series for stationarity by the Dickey- Fuller and Philips Perron test Statistics, calculation of the optimal lag length from the maximum possible selected by the Akaike criteria, the Hannan-Quinn Information Criterion and the Schwartz Information Criterion, verification of cointegration of data series using Johansen test are performed. Empirical calculations have proved the high impact of the shadow economy on the innovative development of the country. All indices are statistically significant at the level of 1% and 5% and 10% respectively. It is substantiated that the state should take into account interdependencies as a basis for the development and implementation of measures aimed at increasing the innovative activity of economic entities, increasing the innovation potential of the country, and so on. [ABSTRACT FROM AUTHOR]

This study is the first attempt to investigate the non-linear impacts of export diversification and export quality on the shadow economy. Using a global sample of 116 countries over the period 2003–2014 and applying for panel econometric techniques, we find that the effects of export diversification and export quality are nonlinear on the shadow economy, respectively. The non-linear effects are also consistently found for low- and middle-income economies and high-income economies. The results are robust through different measures of shadow economy and control variables. Our findings show that this is a tipping point in the relationship of export diversification and export quality with the shadow economy. That is, when moving beyond the tipping point, both export diversification and export quality could reduce the shadow economy. This implies that trade liberalization towards export diversification and export quality is an important factor for curbing the shadow economy. [ABSTRACT FROM AUTHOR]

Asian developing countries face challenges of serious air pollution and large shadow economy. Fiscal policy is anticipated as a solution to cope with these obstacles. This paper empirically examines the impact of shadow economy on air pollution and the role of fiscal policy in moderating the impact through the two tools of government expenditure and taxation in 22 Asian developing countries during 2002–2015. The estimation results from the fixed effects and the system generalized method of moments show that air pollution is positively affected by the shadow economy; and expansionary fiscal policy can reduce air pollution through abating shadow economy, and can lessen the detrimental effect of shadow economy on the environmental quality. Specifically, the increase in government expenditure reduces the positive effect of shadow economy on air pollution, but a tax-hike intensifies it. It is also found a stronger negative impact of government expenditure, compared to positive impact of taxation, and a dominant impact of shadow economy on air pollution. The findings imply that policy-makers can use appropriate fiscal policies to control air pollution and to reduce the destructive effect of the informal economy on the environmental quality in developing countries. Especially, governments in developing countries should allocate more budgets on environmental projects in their fiscal reforms for the sake of moving to greener and more inclusive economies with low-carbon activities. [ABSTRACT FROM AUTHOR]

This study examines the relationship between economic liberalization and the size of the shadow economy in Egypt. We use annual data from 1976 to 2013 and show that economic liberalization policies in Egypt have a statistically significant decreasing effect on the size of the shadow economy as a percent of Gross Domestic Product (GDP). This effect is confirmed for both short- and long-term oriented economic liberalization policies. Based on our results, policies which promote trade and economic liberalization can reduce the extension of the shadow economy in Egypt. Therefore, we suggest conditioning international development assistance to Egypt on demonstrable policy actions with respect to economic liberalization. [ABSTRACT FROM AUTHOR]

During the past few decades, competition between countries has intensified. Every country seeks to become an essential player in international economic relations and take a prominent place in the world market. In this context, foreign direct investment inflows are accepted as a source of competitiveness through knowledge, know-how and technology transfer, but competitiveness is also accepted as a significant determinant of foreign direct investment attraction. Therefore, the specification of foreign direct investment inflow determinants is also important to improve competitiveness. In this research article, we aim to evaluate the impact of shadow economies and human development on foreign direct investment inflows as a possible determinant of competitiveness in 11 post-transition EU members over 1995-2015 period. The methodology employed in the applied section includes comparative and systematic literature analysis as well as second generation panel cointegration and causality analyses regarding both cross-sectional dependence and heterogeneity. The empirical analyses revealed that both the shadow economy and human development are significant determinants of foreign direct investment inflows. The causality analysis revealed a mutual interaction between foreign direct investment inflows and human development for all the countries in the sample, but a two-way causality between the foreign direct investment inflows and shadow economies only for Bulgaria, Croatia, and Romania and a one-way causality from shadow economies to the foreign direct investment inflows in the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia, and Slovenia. The long-run analysis revealed that shadow economies negatively affected foreign direct investment inflows, while human development positively affected foreign direct investment inflows. [ABSTRACT FROM AUTHOR]

This paper examines the impact of shadow economy on income inequality by using a panel data set of 19 Asian countries in the period 1990–2015. In contrast to previous studies, the results from estimations of fixed effect, random effect, and SGMM surprisingly show that the shadow economy reduces income inequality in the research region. Specifically, the shadow economy significantly increases the income share held by lowest quintile and decreases the income share held by highest quintile. The result can be explained by combining the three schools of thought on informal economy including Dualism, Legalism, and Volutarism. The finding contributes to the idea that the shadow economy is not always bad, especially to the poor, out of its negative effects. Therefore, policies to deal with the shadow economy should take the poor into close consideration with other simultaneous solutions for poverty eradication and income inequality reduction in developing countries. [ABSTRACT FROM AUTHOR]

This study used annual time series data in the examination of the relationship among shadow economy, financial market inclusion and economic growth in Nigeria both in the short and long-run periods for our econometric analysis. The time series data covered the period 1990 to 2017. The simple Ordinary Least Squares (OLS) regression and the Error Correction Mechanism (ECM) complemented with the unit root and cointegration tests were applied. The OLS results indicated that the shadow economy facilitates the growth performance of financial market inclusion process in Nigeria. However, the short-run results show that only the one past lagged value of the shadow market statistically explains the financial market inclusion development in Nigeria. The study recommends that short-run financial market inclusion policies should be avoided to prevent the adverse effects of the shadow economy on the inclusive finance development process. [ABSTRACT FROM AUTHOR]

The importance to classify factors affecting payroll amount on the recurrent approach basis of the analysis of cyclic dynamics in regional social and economic systems is determined by a significant amount of labour costs in GDP and gross regional product. The latter are used as indicators for the identification of production cycle stages. Indicators characterizing production cycle stages that are conventionally used (GDP, GRP, the number of organizations, the balanced financial result, the number of employees in economy) do not fully reflect the recurrent relationships between production, social and structural processes in the modern macroeconomic cycle. We suggest supplementing the production cycle analysis with the assessment of payroll dynamics. For this purpose factors of payroll fund dynamics have been systematized at the regional economy scale, they also have been classified considering their endogenous and exogenous character. In particular external factors are determined by socio-economic trends in Russia in general, internal ones are caused by the peculiarities of socio-economic development of a particular region. The methodological feature of the original classification suggested by the authors is its multilevel character and emphasis on the recurrent dependencies analysis. The factors of payroll fund dynamics and GDP have been analyzed for 2015 – 2018 in Perm krai and in several regions of the Volga and Ural Federal districts close to the structure of the economy of Perm krai. The results indicate a multidirectional impact of the factors of the payroll fund on the economy of the region in general and certain economic activities in particular. Thus, we have revealed that the inflation level, the mount and structure of taxes that significantly decrease the base of the tax on personal income and at the same time increase the actual income of the population are among those external factors that significantly impact the payroll fund. The assessment of internal factors has revealed that economic structure of Perm krai significantly influence the dynamics of payroll fund. The changes in the structure affect the GRP salary amount, payroll fund per an employee in the regional economy according to the economic activity type and in shadow economy. The research results will further complement the tools and methods of forecasting and management of cyclical dynamics in the economy of the region on the basis of identification of recurrent dependencies between indicators and phases of production, social and other components of the modern macroeconomic cycle. [ABSTRACT FROM AUTHOR]