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Digitalization And Informality In The Eu: A Pestle-Based Cluster Analysis

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  • MASTAC LAVINIA

    (BUCHAREST UNIVERSITY OF ECONOMIC STUDIES)

Abstract

This paper analyses the relationship between digitalisation and the shadow economy in European countries, applying a PESTLE (Political, Economic, Social, Technological, Legal, Ecological) approach. The study proposes an alternative classification of 30 European countries into three clusters (Low, Medium, High), based on the average shadow economy as a percentage of GDP for the period 2000–2022. The aim is to highlight how the degree of digitalisation interacts with institutional quality and other structural variables to influence the level of tax compliance. The research integrates governance indicators (Control of Corruption, Government Effectiveness, Regulatory Quality) and provides a comparative analysis between groups. The results show that technology is not sufficient to reduce the informal economy in the absence of a coherent, legitimate and functional institutional framework. The study contributes to the literature through an applied, contextualised and differentiated perspective on the role of digitalisation in combating the shadow economy.

Suggested Citation

  • Mastac Lavinia, 2025. "Digitalization And Informality In The Eu: A Pestle-Based Cluster Analysis," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 3, pages 155-167, June.
    • Handle: RePEc:cbu:jrnlec:y:2025:v:3:p:155-167
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