Features of Shadow Economic Phenomena and Factors Contributing to Their Spread
DOI:
https://doi.org/10.51699/economics.v38i1.332Keywords:
Shadow Economy, Informal Sector, Tax Evasion, Governance, Economic Regulation, Institutional Transparency, Economic Development, Civic Engagement, Economic Planning, Informal TradeAbstract
The shadow economy encompasses informal and illicit activities that evade formal regulation, presenting challenges like tax revenue losses and inaccurate economic measurements. Despite its role as a survival mechanism in high-tax, tightly regulated economies, it fosters economic instability, undermines competition, and erodes trust in public institutions. This study identifies a knowledge gap in understanding the interplay of governance quality and shadow economic activities. Using a mixed-methods approach, the research highlights how governance failures, tax burdens, and societal norms perpetuate informality. Results show that targeted tax reforms, institutional transparency, and civic engagement can mitigate these issues, suggesting policies for sustainable economic development.
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