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The Shadow Economy and Corruption as Development Impediments

In: Economic Integration, Currency Union, and Sustainable and Inclusive Growth in East Africa

Author

Listed:
  • Almas Heshmati

    (Jönköping International Business School
    Sogang University)

Abstract

Shadow economic activity has been on the rise leading to many problems for society, the state and also when it comes to trust in its organizations. The shadow economy has a significant share of the overall economy and captures all the activities beyond those measured by official activities. The rise of the shadow economy around the world is attributed to the stronger presence of government activity, increase in tax rates and taxpayer firms and households’ desire to escape taxes and regulatory restrictions. This paper is a review of recent studies investigating various theoretical and empirical aspects of activities in the shadow economy and the measurement and development of the shadow economy across developed, developing and transition economies. It discusses a number of areas related to the shadow economy and their relationship with public performance and economic growth. The review leads to the identification of several indicators with negative or positive association with the size of the shadow economy and its causal effects.

Suggested Citation

  • Almas Heshmati, 2016. "The Shadow Economy and Corruption as Development Impediments," Advances in African Economic, Social and Political Development, in: Almas Heshmati (ed.), Economic Integration, Currency Union, and Sustainable and Inclusive Growth in East Africa, pages 115-133, Springer.
    • Handle: RePEc:spr:aaechp:978-3-319-30432-8_7
    DOI: 10.1007/978-3-319-30432-8_7
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    Cited by:

    1. Gheorghe H. Popescu & Adriana Ana Maria Davidescu & Catalin Huidumac, 2018. "Researching the Main Causes of the Romanian Shadow Economy at the Micro and Macro Levels: Implications for Sustainable Development," Sustainability, MDPI, vol. 10(10), pages 1-37, September.

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