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Analisys of the Shadow Economy in the Wood Industry

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  • Jože Kocjancic

    (University of Primorska, Slovenia)

  • Stefan Bojnec

    (University of Primorska, Slovenia)

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    Abstract

    This paper investigates the impact of the reduction in the number and size structure of large enterprises in the wood industry on the dynamics of the shadow economy in the wood industry in Slovenia. The empirical results show that the dynamics in the reduction of the number and size structure of large enterprises in the wood industry significantly contributes on the increasing share of the shadow economy in the wood industry. The most important decision factors to participate in the shadow economy are the level of taxes and contributions, opportunities for better earnings and tax regulations. The estimated share of the shadow economy in the wood industry is 21.7%. As the basic solutions to reduce the share of the shadow economy and to speed up the dynamics of the entering of small enterprises in the wood industry are improved regulation system to provide better incentives to operate within the formal sector and better access for necessary financial capital at acceptable guarantees. As important are also good practices by the state institutions by providing incentives for entrepreneurship and encouraging decisions for the setting up of an enterprise.

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    Bibliographic Info

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    This chapter was published in: Jože Kocjancic & Stefan Bojnec , , pages 389-403, 2011.

    This item is provided by University of Primorska, Faculty of Management Koper in its series MIC 2011: Managing Sustainability? Proceedings of the 12th International Conference, Portorož, 23–26 November 2011 [Selected Papers] with number 389-403.

    Handle: RePEc:mgt:micp11:389-403

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    Web page: http://www.fm-kp.si/zalozba/ISBN/978-961-266-113-7.htm
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    Related research

    Keywords: Shadow economy; firm dynamics; wood industry; Slovenia.;

    References

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    1. Bojan Nastav & Štefan Bojnec, 2008. "Small Businesses and the Shadow Economy," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 58(01-02), pages 68-81, January.
    2. Bojan Nastav & Stefan Bojnec, 2007. "Shadow Economy in Slovenia: The Labour Approach," Managing Global Transitions, University of Primorska, Faculty of Management Koper, vol. 5(2), pages 193-208.
    3. Edgar L. Feige & Ivica Urban, 2008. "Measuring Underground (Unobserved, Non-Observed, Unrecorded) Economies in Transition Countries: Can We Trust GDP?," William Davidson Institute Working Papers Series wp913, William Davidson Institute at the University of Michigan.
    4. Friedrich Schneider & Dominik Enste, 2000. "Shadow Economies Around the World," IMF Working Papers 00/26, International Monetary Fund.
    5. repec:cup:cbooks:9780521814089 is not listed on IDEAS
    6. Simon Johnson & Daniel Kaufmann & John McMillan & Christopher Woodruff, 2003. "Why Do Firms Hide? Bribes and Unofficial Activity after Communism," Public Economics 0308004, EconWPA.
    7. Thomas, Jim, 1999. "Quantifying the Black Economy: 'Measurement without Theory' Yet Again?," Economic Journal, Royal Economic Society, vol. 109(456), pages F381-89, June.
    8. Schneider, Friedrich G., 2007. "Shadow Economies and Corruption All Over the World: New Estimates for 145 Countries," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy, vol. 1(9), pages 1-66.
    9. Dominik H. Enste & Friedrich Schneider, 2000. "Shadow Economies: Size, Causes, and Consequences," Journal of Economic Literature, American Economic Association, vol. 38(1), pages 77-114, March.
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