There are many unexplored topics in economics. One of the most interesting is the shadow market. Why? The fact is that this is such an example when we can say that at the same time the scale of the economic phenomenon and the degree of its knowledge are simply not comparable. The shadow market covers all areas of society and is of significant interest to researchers.
general information
The shadow economy and market is an extremely difficult topic to research. This phenomenon can be fairly easily identified. But measuring accurately is a matter of extreme complexity. Why? The fact is that information can be obtained either from people detained by law enforcement officers, which casts doubt on the person’s desire to appear clean, or on confidential grounds. In other words, it is not provided that data on the mechanisms of work will be disclosed.
Why is the shadow market interesting for us?
Why study it? First of all, this is necessary in order to understand how it affects ordinary economic processes, such as revenue generation, their distribution, investments, trade, economic growth and so on. Moreover, in many countries the shadow market has such a great influence that it poses a danger to the state. The Russian Federation was no exception to this rule. The lazy one does not speak about the great influence of the criminal sector, which is a derivative of this problem. Moreover, the shadow market in Russia has such a tendency that it can more and more decisively decide the direction of political and socio-economic processes. Only an active civil society can overcome this situation, when each person understands that it is necessary to act primarily for the benefit of mutually beneficial common interests.
What is a shadow economy?
Performance can be either included in GDP indicators or not taken into account. The first relates to various fields of activity that are not prohibited by law, while the second refers to postscripts, fraud, etc. Conventionally, the following areas in the manufacturing sector can be distinguished here:
- A legal activity for which a license is required, but the company operates without it.
- Prohibited economic activity.
In addition to them, there are also sectors of the community and home economies. They are unregulated and uncontrolled. Because of this, the community and home economies are usually not displayed in statistics. And if they are present there, then their indicators are only approximate.
Why does it arise?
What is the reason the
black market is black? The answer will vary for different regions of the world, but they can be conditionally arranged in three groups:
- Economic forces. The most famous and at the same time classic example of the cause of occurrence are too high taxes. When more than 50% of the profits of the enterprise are taken away by the state, the economic entity begins to lose incentives to conduct business. At least officially. And many enterprises, in order to get more profit, go into the shadows. Also, this process may be a consequence of the poor general condition of the economy and / or the crisis of the financial system. In this case, moving to the shadow sector can result in a lot of advantages for the company that cover potential risks.
- Social factors. The low standard of living of the population contributes significantly to the fact that hidden types of economic activity begin to be conducted. The high unemployment rate also contributes to this. Due to this state of affairs, a certain part of the population begins to focus on earning income in any way possible. In addition, the delay or non-payment of wages, the flow of refugees - all this can be added to the influence of the growth of the shadow market. When they say that a tenth of the adult working population may not work for years, believe me, this is not so. Yes, there are precedents, but they are more likely exceptions.
- Legal factors. This includes the elementary imperfection of the legislation.
These are the reasons for the emergence of a shadow market.
Can this sector of the economy be useful?
Oddly enough, the answer is positive. Usually, the shadow
sector of the economy means the slave trade, the sale of drugs, weapons, money laundering. Of course, these are negative points, the elimination of which should be worked on.
But there are also positive elements. First of all, these are the previously mentioned sectors of the community and home economies. The first includes economic activity, which is aimed at producing and selling goods and services that are aimed at non-monetary exchange. It acts only within the framework of certain communities, which are formed on the basis of certain ties: family, friendly, neighborly and the like. The home economy is aimed at labor activity, which allows you to create products that replace goods bought with money. An example is the garden where vegetables are grown.
Should the useful sectors of the shadow economy really be attributed to it?
There is a wide discourse on this issue. Many experts advocate that the community and home economies not be considered part of the shadow market. As an argument, it is argued that there is no shelter from taxation and accounting, there is no official registration and payment of taxes. Moreover, such activities are not criminal in nature. In this case, the shadow market as a factor in disruption of the market balance does not work, therefore, the question of the advisability of such an approach is often raised.
What is the scale?
This is a very difficult task. The reason for this state of affairs is in the nature of the shadow market. The economy in this case is hidden. Therefore, different, usually indirect methods are used for this purpose.
Let's explore the shadow labor market. According to the latest data, it is estimated that approximately $ 8 trillion of value added is created each year, which is not included in official statistics. This volume is comparable to the size of the largest economies in the world. In percentage terms, the size ranges from 10 to 40 percent of GDP. Moreover, the more developed and comfortable a country is for entrepreneurial activity, the higher the standard of living and more reliable institutions, the lower this indicator. Of course, there are countries that go beyond the borders of the above range. Negative examples include Nigeria and Thailand. It is believed that the shadow sector in these countries makes up more than 70% of the entire economy. Egypt, Bolivia and Panama are not far behind them. At the same time, very interesting trends are observed.
Shadow sector work
In almost all countries of Asia, Latin America and Africa, there is a parallel economy, which in scale is not much inferior to the official one. In this case, a comparison is interesting. So, if we consider the United States, Germany, France and, to some extent, Russia, it is characteristic that small firms usually work in the shadow sector. Earning in this case is considered as an additional source of income and the maintenance of economic activity.
In Latin America, Asia and Africa, the situation is different. There is quite wide migration from the countryside. However, people rarely find jobs in the legal sector. As a result, they have to settle in the shadow economy. Widespread corruption and numerous flaws in legislation contribute to this in no small measure. Special attention is generally paid to post-socialist countries. Here the most sad things are with the states of the Caucasus and Central Asia. The size of the shadow sector in these territories is approximately twice as high as those that are observed on average in the Russian Federation.