Search

This paper is one of the first which provides an in-depth quantitative analysis of how the development of the tourism industry impacts on the size of the shadow economy of a specific destination. The paper employs time-series techniques and annual data from 1960 to 2018 from Turkey. First, the size of the shadow economy is estimated using the electricity consumption method. The estimates are then used to assess the effect of tourism development on the size of the shadow economy. The findings show that there is a negative relationship between the two. A 1% increase in international tourism arrivals leads to a 0.21% and 0.316% fall in the size of the shadow economy in the short-run and long-run respectively. It implies that as the tourism sector develops, it becomes instrumental in modernising the Turkish economy leading to the movement of resources from the shadow economy to the formal sector. In the long-run the effect of the tourism industry in reducing the size of the shadow economy surpasses that of the financial sector of Turkey. [ABSTRACT FROM AUTHOR]

Even though the literature on unregistered economic activity is growing at an increasing rate, we commonly encounter simple ordinary least squares methods and panel regressions, largely ignoring the recent rapid developments in machine learning methods. This study provides a new approach to more accurately estimate the size of the non-observed economy using machine learning methods. Compared to two currency demand-based models used to estimate the size of the non-observed economy, we show that a Random Forest algorithm can more accurately estimate the demand for currency, which is known to provide a fair estimation of the unregistered economic activity. The proposed approach shows superior forecasting capabilities compared to the current state-of-the-art linear regression-based methods dedicated to estimating non-observed economic activity. [ABSTRACT FROM AUTHOR]

The relationship between economic growth and the development of financial systems has been analyzed from different perspectives for a long time. This paper addresses the effects of the informal economy on the relationship between financial development and economic growth, using a panel data covering 20 countries during the period 1993–2020. The results show that financial development, as measured by the IMF’s Financial Development Index, is positively associated with economic growth (the coefficient α1 related to financial development fd is positive and statistically significant at 5%). The results also show that large sizes of the informal economy moderate the influence of this association (α1 remains positive and statistically significant at 1%, while the coefficient α2 related to the interaction between financial development and informal economy, fd and ie, is negative and statistically significant at 1%). In effect, financial development has the greatest impact on economic growth whenever there is control over the informal economy’s size. Inversely, a favorable ground for the informal economy limits the positive association between financial development and economic growth. However, the results show the absence of a causality relationship between financial development and economic growth (W-bar = 1.0015 and Z-bar = 0.0048; p-value = 0.9980). The informal economy plays no role in making this type of link significant (W-bar = 0.9761 and Z-bar = -0.0756; p-value = 0.9520).

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]

Understanding the determinants of the informal economy is a crucial issue in economic development due to its far-reaching effects on development efforts. Previous studies focused exclusively on factors that can potentially reduce the relative size of the shadow economy. However, these attempts have not enjoyed much success to date in Africa, where informality has continued to thrive. We contend that realistic medium-term goals, as opposed to obligatory formalisation, could increase the output of informal businesses by providing enough infrastructure and a welcoming business climate, which would at the same time foster formalisation. Using OLS, FE and system GMM with data on 42 African countries covering 2003–2018, we find that infrastructure development reduces the relative size of the shadow economy in African countries. Our results remained consistent when we controlled for the effects of other determinants of the informal economy, employed other estimators, and used an alternative measure of the informal economy. [ABSTRACT FROM AUTHOR]

This article proposes a new approach to estimate the informal economy (IE) by using Structural Equation Modeling (SEM). Using a Monte Carlo Simulation and empirical analysis of the Italian IE as an example, we provide general conclusions on the reliability and limitations of the SEM approach to estimate the IE. Practical guidelines on how to apply this method and the way to deal with the most problematic issues are provided. We conclude that the SEM approach may be effectively used, as a complementary method to the National Accounting Approach, to adjust official statistics for the presence of the IE. [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]

The current article is intended to bring two contributions to the study of informality. Empirically, it shares the result of the shadow economy survey for the 2017 and 2018 fiscal years for Kyrgyzstan, Russia, and Ukraine. These results are used to calculate the shadow economy index estimated as a percentage of the GDP. Already established as an annual exercise for Latvia and the Baltics since 2010, the survey has been applied to Moldova and Romania (since 2016), Poland (2015-2016), and Kosovo (in 2018). In the frame of the project “SHADOW: An Exploration of the Nature of Informal Economies and Shadow Practices in the Former USSR Region,” the scope of the survey was expanded to Kyrgyzstan, Russia, and Ukraine, keeping the same methodology and used for direct measurement of underground activities.² By doing this, we discuss the use of direct measurement approaches to suggest that, while quantitative approaches are useful to estimate the size of shadow economies, direct approaches can be used to integrate these data and look for deeper correlations between the persistence of shadow transactions and some societal tendencies that are not necessarily economic. [ABSTRACT FROM AUTHOR]

This paper analyzes the effect of refugee inflows on the shadow, or underground, economy of host nations using panel data for 120 countries over the 1991–2017 period. The results show that refugee inflows increase the size of the shadow economy, particularly in low- and middle-income countries. [ABSTRACT FROM AUTHOR]

In this paper, the authors point out the informal economy of the Republic of Serbia and European countries as the biggest problem for every country. The following is the share of industries as well as the gross domestic product of nations. They are reasons why the informal economy is so ubiquitous as well as the idea that it is necessary to decrease it. The paper deals with research aimed at determination of the impact of the informal economy, in which sector of the economy it has the biggest, why it persists, and financial losses because of the informal economy. The paper discusses secondary damages due to the informal economy and the causes of why they go on. The paper also analyzes the influence of the shadow economy on the EU and OECD countries’ GDPs. The authors discuss why the informal economy persists and what measures should be taken to prevent or at least reduce it. [ABSTRACT FROM AUTHOR]

This paper surveys the literature on the definitions and theories of the informal economy (IE). It outlines the main differences in the definitional approaches of informality and proposes a definition for the IE that may be consistent with measurement and policy. The literature review distinguishes three, not mutually exclusive, approaches to the IE: the "neoclassical," the "macro‐econometric," and the "conceptual" perspectives. I conclude the survey by outlining a framework that points out the main differences and similarities among the schools of thought on the nature of the IE. From a normative perspective, a leading recommendation emerges: a "one‐size‐fits‐all" policy response is inadequate to deal with the heterogeneous nature of the IE. Policy measures should be tailored around the distinct segments of the IE grounded in terms of characteristics, contexts, and needs of the informal units. [ABSTRACT FROM AUTHOR]

Institutional theory has explained informal employment to result from formal institutional failings. The aim of this paper is to identify the formal institutional failings associated with informal employment so that action can be taken by governments. Using the Tobit model for econometric analysis and reporting conditional and unconditional marginal effects of the 2021 Balkans Business Barometer survey conducted in six Western Balkan economies (Albania, Bosnia and Herzegovina, Kosovo, North Macedonia, Montenegro and Serbia), the contribution of this paper is to reveal that the perceived incidence and share of informal employment is significantly associated with businesses perceiving governance, public integrity and corruption as very negative or negative, the perception that the government does not consider business concerns and business dissatisfaction with public services. However, the perceived incidence and share of informal employment is not significantly associated with the views of business on tax rates and tax administration, or the perceived instability and lack of predictability of government. The theoretical and policy implications are then discussed. [ABSTRACT FROM AUTHOR]

The Economic Community of West African States (ECOWAS) is one of the most dynamic African sub-regional organizations in several areas, such as economic integration and environmental conservation. On the other hand, it is also one of the sub-regions with the largest size of the shadow economy in the world. This article empirically explores the impact of the shadow economy on economic growth and CO2 emissions in ECOWAS countries. Using system generalized method of moment (SGMM) and common correlated effects mean group (CCEMG) estimators on annual data from 14 ECOWAS countries over the period 1991–2016, the results suggest that the shadow economy decreases economic growth and CO2 emissions. However, the impact of the shadow economy on economic growth is more significant and higher than that on CO2 emissions. The results also indicate that industrialization and urbanization tend to increase economic growth and CO2 emissions in these countries. [ABSTRACT FROM AUTHOR]

This paper carries out an extensive analysis of the drivers of the shadow economy (SE) in the welfare states of the European Union for the period 1995-2017. The empirical analysis is applied to the 28 EU 1 1 As we consider the period before the Brexit, when the United Kingdom is still EU member. member states, which are divided into the following clusters, according to their welfare model: Nordic, Liberal, Continental, Mediterranean, and Eastern models. The relationship between the SE and its determinants is analyzed based on the panel corrected standard errors (PCSEs) model in the presence of cross-section dependence and fully modified ordinary least square (FMOLS) for investigating the long-run impact. The main empirical findings derived from a causality analysis reveal the important role played by economic development and welfare in the SE's decline in the past two decades. Increasing social protection expenditure and government efficiency are also considered as drivers of the SE's decline and for this reason, need to be included in the European Union's policy for combating the SE. Based on the results from this empirical study it is argued that EU countries need to implement an integrated set of rules and regulations in order to reduce the level of the SE in the long run. [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.

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 factors, causing the rapid expansion of the shadow economy (informal economy) in developing countries, especially in sub-Saharan Africa have been considered in the article. The shadow economic sector is the largest and fast growing sector in the region, therefore, it is necessary to study and make policy recommendations for development. The authors have studied some definitions of the shadow economy of well-known authors and outlined the essence and background of these definitions. Furthermore, the factors, dragging the development of the sector have been considered. The reasons behind low financial access among these enterprises have been studied. It has been revealed, that information asymmetry is one of the main problems, which limits access to finance by firms of the shadow economy. Consequently, small, (lower) access to finance limits the innovation activities of small and medium-sized enterprises, through which these firms produce goods and services to address (meet) local needs.However, the role of the shadow economy cannot be overlooked as the sector provides more than 55 % of employ and also contributes more than 50 % of the region’s gross domestic product. Thus, it is more able to stifle small and medium-sized enterprises in the informal sector of the economy and their innovative projects, which can slow down the technological industrialization and economic development of the region. The author’s position on measures to solve the problems of financial accessibility and access of shadow small and medium-sized enterprises to financial resources in the region has been substantiated. Thus, there is need of great attention of policy makers and the business community in tackling the problems, designated in this article, because it contributes to the economic and innovative development of the region.

Conventionally, entrepreneurs participating wholly or partially in the informal economy were explained as rational economic actors doing so when the benefits outweigh the costs. However, the finding that many entrepreneurs do not operate in the informal economy even when the pay-off is greater than the costs has led to the emergence of a new tax morale approach. Grounded in institutional theory, this asserts that formal institutional problems lead to an asymmetry between the laws and regulation, and entrepreneurs’ views on the acceptability of informality. The greater this asymmetry (measured by the level of tax morale), the greater is the prevalence of informal entrepreneurship. To evaluate this, interviews with a nationally representative sample of 1,430 entrepreneurs in Bulgaria, Croatia and FYR Macedonia are reported. Using an ordered logit model, the contribution of this paper is to reveal that entrepreneurs operating in the informal economy have significantly lower tax morale, and that the formal institutional problems associated with lower tax morale include a lack of tax fairness, corruption and political instability. The theoretical and policy implications are then discussed.

There is an urgent need for a comprehensive study and analysis of negative processes of deepening the level of second relations in the economy. The ghost economy is the result of the functioning and increasing signs of a systemic crisis in the economy, which arises due to the discrepancy and inadequacy of the methods used to implement market transformations. The spread of the gray economy occurred on the basis of the destruction of existing distribution relations and the construction of new ones, which significantly violated the established balance of economic entities interests, the parity of its separate spheres development, and the motivation for effective management. Another meaningful aspect is that the gray sector of the economy in any country really exists; it quickly reacts to changes in the implementation of the state economic life. That is why it is extremely important when studying the problem of increasing the scale of the gray economy is the prompt and rapid accumulation of information dealing with changes in its basic indicators. Hiding of tax revenues is a crime, and tax minimization, that is, an attempt to reduce their amount, is completely legal and provides the work of a large number of specialists in the field of tax law and accounting. But on the other hand, for economic entities operating in Ukraine, the critical threat is not the fiscal capability, but the uncertainty in the legislation and the political and economic life of the country.

This paper investigates whether the size of the shadow economy increases income inequality in Uganda. This p3aper applies the autoregressive distributed lag (ARDL) bounds testing approach to cointegration, to test the long- and short-run relationship between the shadow economy and income inequality. The results indicate a positive and statistically significant relationship between the size of the shadow economy and income inequality in both the long-run and short-run, all else equal. The results show that a large size of the shadow economy significantly increases income inequality, in both the long- and short-run. This suggests that people who fail to be absorbed into the formal economy face fewer livelihood opportunities, giving them the incentive to operate in the shadow economy as a means of survival, for them and their families since there are fewer chances of success in the formal economy. Our findings suggest that income inequality could be partially driven by increasing informality in the country. The practical implication of these results is that policies aimed at tackling income inequality should also be directed at addressing the underlying factors that drive the shadow economy.

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]

This paper investigates whether the size of the shadow economy increases income inequality in Uganda. This p3aper applies the autoregressive distributed lag (ARDL) bounds testing approach to cointegration, to test the long- and short-run relationship between the shadow economy and income inequality. The results indicate a positive and statistically significant relationship between the size of the shadow economy and income inequality in both the long-run and short-run, all else equal. The results show that a large size of the shadow economy significantly increases income inequality, in both the long- and short-run. This suggests that people who fail to be absorbed into the formal economy face fewer livelihood opportunities, giving them the incentive to operate in the shadow economy as a means of survival, for them and their families since there are fewer chances of success in the formal economy. Our findings suggest that income inequality could be partially driven by increasing informality in the country. The practical implication of these results is that policies aimed at tackling income inequality should also be directed at addressing the underlying factors that drive the shadow economy. [ABSTRACT FROM AUTHOR]

In this paper, the size of the informal economy of Pakistan is determined by including the legal and political-institutional variables as determinants. By using the MIMIC model average estimate for the informal economy of Pakistan is 37.75 percent from 1995 to 2017. The study tries to explore the institutional implications of the informal economy for policymakers to reduce and control the informal economy in the developing country. Empirical results show that the most significant legal variable is Law and Order and the most important political variable is Religion in Politics for measuring the informal economy. Departing from existing studies, institutional determinants are explored in detail because these different institutional determinants may affect the informal economy differently in developed, developing, and underdeveloped countries. The policy formation process can be more effective in developing countries like Pakistan with consideration of the most relevant institutional factors in estimation.

In this paper, using primary data collected from business owners, we examine the nature and obstacles in the informal sector of Uganda. We find that education level matters in the selection of enterprises. The bulk of businesses, like eating kiosks, fish selling, shoe shining among others that require no specialized skill to operate were mainly run by primary school dropouts and those with no formal level of education. Furthermore, we find evidence of a strong entrepreneurial spirit among secondary school dropouts than at any other education level. Across all businesses surveyed, secondary school dropouts run a high number of informal enterprises. Evidence suggests that their motivation is driven by two key factors, namely, wanting to take advantage of an existing business opportunity and failure to find employment in the formal sector. The empirical results show that access to finance, crime, theft and disorder, electricity, water, taxes, burdensome inspections, and informal gifts are robust and significant obstacles to the operations of the informal sector in Uganda. Policies should focus on a regulatory framework that supports the sector to create secure livelihoods and generate employment opportunities for the unemployed rather than viewing the sector as a source of “illegality.” Improving access to finance, providing regular power and water supply, and improving the tax regime would mitigate the obstacles faced by informal businesses leading to possible formalization. Informal sector businesses should not be perceived as “illegal entities” but rather complementary effort by an increasingly enterprising population in the country.

The study examines the analogy of the concepts of shadow economy and non-observed economy. This study is relevant due to the fact that the studies related to shadow economy face the diversity of concepts: it seems that the same phenomenon – companies’ hidden activity – is named differently in various sources. In scientific literature, companies’ hidden activity is commonly named as a ‘shadow economy’ (Enste, 2015, 2018; Gaspareniene, et al., 2014; Goel, et al., 2019; Koufopoulou, et al., 2019; Medina and Schneider, 2018; Novkovska, 2019; Remeikienė, et al., 2017; Sauka and Putnins, 2019; Schneider, 2018a, 2019; Williams and Horodnic, 2015; Zaman and Goschin, 2015). Meanwhile, official statistical institutions, e.g. Statistics Lithuania, Eurostat, World Bank, Organization for Economic Co-operation and Development, use other term to define companies’ hidden activity, i.e. ‘non-observed economy’ (European Commission, International Monetary Fund, Organisation for Economic Co-operation and Development, United Nations, World Bank, 2009; Juškienė, et al., 2004; Lietuvos statistikos departamentas, 2016, 2017). Taking into account that both of these concepts are used in the same context, it can be assumed that the concepts of shadow economy and non-observed economy are identical. However, in order to accept or reject this statement, it is essential to analyze in detail the object of the study – the concepts of the shadow economy and the non-observed economy. Therefore, the purpose of this study is to structure the concepts of shadow economy and non-observed economy and to identify their similarities and differences. It is done by using the following method: the study of concepts is based on a comparative analysis of the types of shadow economy and the areas of non-observed economy. Due to the complexity of economic processes, shadow economy and non-observed economy cover many fields. The types of shadow economy concept which is defined by the author are the following: • The underground economy which covers market output (e.g. undeclared income from legal activities, salaries paid in envelopes, concealed income, concealed value added or other taxes) concealed by legal operators. • The illegal economy covers the production of illicit operators (e.g. drug trafficking, illegal alcohol production, smuggling). • The informal economy covers market and private use output of units that have no obligation to register their activity (e.g. own-use production of households, auxiliaries). Correspondingly, the areas of non-observed economy concept which is used by official statistical institutions are the following: • The underground economy – a legal manufacturing activity that is deliberately concealed from the authorities due to tax evasion, safety at work or other non-compliance. • The illegal economy – the manufacturing activity of goods and services that is prohibited by law or carried out by unauthorized manufacturers. • The informal sector – manufacturing activities of unregistered households or unincorporated enterprises with non-registered employees, that produce market output. • The household production for own final use – the productive activity of households producing goods and services capitalized within the same households. Summarizing the shadow economy concept which is defined by the author and non-observed economy concept which is used by official statistical institutions, it can be stated that although the essence of the shadow economy and non-observed economy is the same, these concepts are not analogous. Thus, the assumption done at the beginning of this study (that the concepts of the shadow economy and non-observed economy are identical) is rejected. The similarity between the concepts of shadow economy and non-observed economy is related to the fact that both of them include market processes that violate legal regulation and adversely affect tax revenue and financial interests of the state, where official institutions are not informed about such activity. In addition to the similarity of the analyzed concepts, shadow economy as well as non-observed economy include underground, informal, illegal economies and production for own final use. The fundamental difference of the analyzed concepts is that shadow economy does not include statistical inaccuracies, but statistical inaccuracies are included in non-observed economy. Basically, statistical inaccuracies are defined as relevant information that is not taken into account due to weaknesses in the statistical surveys. To sum it up, shadow economy researchers who rely on non-observed economy data published by official statistical institutions, should pay attention to the treatment of statistical inaccuracies. Theoretically, if the part of statistical inaccuracies in non-observed economy is insignificant, then non-observed economy can be identified as the shadow economy. However, in order to ensure the quality of studies, in practice it is recommended to indicate to which specific types of shadow economy or areas of non-observed economy researchers refer to in their studies.

The article considers the market of narcotics as a part of the formal and informal economy. By narcotics, the author means psychoactive substances and plants containing them, which are banned, subject to control or non-prohibited, but have a psychophysical effect on human body. Drug-related psychoactive substances are classified according to the prohibition criterion and restrictions on a turnover with reference to the illegal (criminal) or shadow economy. The author considers the illegal drug market as a latent self-organizing system of socio-economic relations of criminal and shadow nature. Such market is oriented towards the turnover of potentially illegal or dangerous psychoactive substances, which are prohibited or restricted for use in non-medical purposes. The analysis of the state and development of the drug situation on the territory of the entities of the Ural Federal District confirms the relevance of the problem of drug abuse. In recent years, the primary incidence of drug addiction and harmful drug use among the adolescents aged 15–17 have grown. Synthetic narcotics and psychotropic substances of high narcogenicity dominate in the current drug market. Over the past 5 years, the average cost of a single dose of drug remains virtually unchanged. This reflects the conditional balance of purchasing power and competition in the drug market. The disparity in the volume of seized cannabis drugs and the number of cannabinoid users observed by medical institutions suggests a high level of latency in this category of drug users. To assess the degree of negative impact of the drug market, the author proposes to use a method of calculating the socioeconomic costs of the consequences of drug addiction. The methodology is supplemented with tools for determining the number of psychoactive substances consumers on the basis of the mass of these substances withdrawn from illicit trafficking, using the concentration and recalculation coefficients. The author develops a methodology for assessing the economic effect from medical and social rehabilitation of drug-dependant persons. This methodology allows to economically substantiate the development of the national rehabilitation system and determine the economic costs to be reduced from its implementation. As a result of approbation of the methodologies, the author has determined the limiting coefficient of latency of persons, consuming psychoactive substances for non-medical purposes. Furthermore, these methodologies have allowed to define the share of the persons, who successfully completed medical and social rehabilitation. The excess of this share demostrates the positive economic effect of rehabilitation programs. The proposed methods can be applied in economic calculations to justify the establishment and functioning of drug addiction medical and social rehabilitation centres in the subjects of the Federation and to assess their performance.

This study is the first to estimate the size of the informal tourism economy. Using a dynamic general equilibrium model, this paper first estimates the size of the informal tourism economy and then assesses its linkages to key labour market variables in Thailand. Empirical results indicate that: (a) the informal tourism economy grows faster than the formal tourism and aggregate economy; (b) both formal and informal tourism economies absorb the unemployed; (c) the relationship between formal and informal economies is negative in the aggregate but positive in the tourism sector. [ABSTRACT FROM AUTHOR]

In this paper, using primary data collected from business owners, we examine the nature and obstacles in the informal sector of Uganda. We find that education level matters in the selection of enterprises. The bulk of businesses, like eating kiosks, fish selling, shoe shining among others that require no specialized skill to operate were mainly run by primary school dropouts and those with no formal level of education. Furthermore, we find evidence of a strong entrepreneurial spirit among secondary school dropouts than at any other education level. Across all businesses surveyed, secondary school dropouts run a high number of informal enterprises. Evidence suggests that their motivation is driven by two key factors, namely, wanting to take advantage of an existing business opportunity and failure to find employment in the formal sector. The empirical results show that access to finance, crime, theft and disorder, electricity, water, taxes, burdensome inspections, and informal gifts are robust and significant obstacles to the operations of the informal sector in Uganda. Policies should focus on a regulatory framework that supports the sector to create secure livelihoods and generate employment opportunities for the unemployed rather than viewing the sector as a source of "illegality." Improving access to finance, providing regular power and water supply, and improving the tax regime would mitigate the obstacles faced by informal businesses leading to possible formalization. Informal sector businesses should not be perceived as "illegal entities" but rather complementary effort by an increasingly enterprising population in the country. [ABSTRACT FROM AUTHOR]

In this paper, the size of the informal economy of Pakistan is determined by including the legal and political-institutional variables as determinants. By using the MIMIC model average estimate for the informal economy of Pakistan is 37.75 percent from 1995 to 2017. The study tries to explore the institutional implications of the informal economy for policymakers to reduce and control the informal economy in the developing country. Empirical results show that the most significant legal variable is Law and Order and the most important political variable is Religion in Politics for measuring the informal economy. Departing from existing studies, institutional determinants are explored in detail because these different institutional determinants may affect the informal economy differently in developed, developing, and underdeveloped countries. The policy formation process can be more effective in developing countries like Pakistan with consideration of the most relevant institutional factors in estimation. [ABSTRACT FROM AUTHOR]

Using panel data for a large cross-country sample, we consider the influences of FDI inflows, inward development aid, and immigration on the informal sector. Both FDI and immigration increase the informal sector, with the effect of immigration being relatively more robust. Aid inflows reduce the informal sector, but the statistical significance is low. Among the control variables, government size persistently increases the informal economy, while inflation sometimes lowers the informal sector. As a secondary exercise, we consider the effect of globalization and note the informality-increasing role of social and overall globalization, with economic and political globalization being statistically insignificant. [ABSTRACT FROM AUTHOR]