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Shadow economy revisited: logic, morality and intuition in corrupt practices and illegal channels

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  • Orkodashvili, Mariam

Abstract

The aim of the paper is to analyze how corruption contributes to the spread of shadow economy and damages viable economic development of any country. The unfreedoms that are created under the conditions of illegal transactions and corrupt practices considerably limit the opportunities of individuals to develop and use their capabilities (Sen, 2000) to the full extent and make their contribution to the development of their countries’ economies and sociocultural progress. The short-sighted desire to receive gain and extra revenue through illegal actions often obscures the capacity to comprehend the size and extent of the damage that such actions bring to the economic development of the country and sociocultural progress of the society in the long run. Under these conditions, the paper perceives logic (e.g. cost-benefit analysis, pragmatic calculations of profit-making, etc.), morality (i.e. ethical norms) and intuition (i.e. the intuitive decision whether to engage in illegal practices, where the estimation of the degrees of risk and confidence plays significant role) as three important human features that influence individuals’, corporations’ and governments’ decisions whether or not to engage directly or foster indirectly the cultivation of illegal practices. Therefore, the idea that the paper is trying to support is that while analyzing the instances of corruption on any given level (individual, organizational, governmental, or cross-country), the factors of logic, moral and intuition should be all taken into consideration in order to better understand such illegal actions, systems, channels and mechanisms and design more comprehensive fighting strategies against corruption than are offered today by numerous scholars, organizations or public bodies.

Suggested Citation

  • Orkodashvili, Mariam, 2010. "Shadow economy revisited: logic, morality and intuition in corrupt practices and illegal channels," MPRA Paper 20391, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:20391
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    File URL: https://mpra.ub.uni-muenchen.de/20391/1/MPRA_paper_20391.pdf
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    References listed on IDEAS

    as
    1. Eric M. Uslaner, 2011. "Corruption and Inequality," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 9(2), pages 20-24, 07.
    2. Rose-Ackerman, Susan, 1975. "The economics of corruption," Journal of Public Economics, Elsevier, vol. 4(2), pages 187-203, February.
    3. Luis A. Sosa, 2004. "Wages and Other Determinants of Corruption," Review of Development Economics, Wiley Blackwell, vol. 8(4), pages 597-605, November.
    4. Andersen, Torben M. & Beier, Niels C., 2005. "International transmission of transitory and persistent monetary shocks under imperfect information," Journal of International Economics, Elsevier, vol. 66(2), pages 485-507, July.
    5. Harvey, David, 2007. "A Brief History of Neoliberalism," OUP Catalogue, Oxford University Press, number 9780199283279.
    6. Pranab Bardhan, 1997. "Corruption and Development: A Review of Issues," Journal of Economic Literature, American Economic Association, vol. 35(3), pages 1320-1346, September.
    7. Mauro, Paolo, 1998. "Corruption and the composition of government expenditure," Journal of Public Economics, Elsevier, vol. 69(2), pages 263-279, June.
    8. Graf Lambsdorff, Johann, 2005. "Consequences and causes of corruption: What do we know from a cross-section of countries?," Passauer Diskussionspapiere, Volkswirtschaftliche Reihe V-34-05, University of Passau, Faculty of Business and Economics.
    9. Paolo Mauro, 1995. "Corruption and Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 110(3), pages 681-712.
    10. repec:ces:ifodic:v:9:y:2011:i:2:p:16132624 is not listed on IDEAS
    11. Reinikka, Ritva & Svensson, Jakob, 2006. "Using Micro-Surveys to Measure and Explain Corruption," World Development, Elsevier, vol. 34(2), pages 359-370, February.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    shadow economy; unofficial GDP; illegal income; corruption; illegal contracts and channels; economic development; economic growth; logic; ethical values; risk evaluation; intuition; corruption on individual; corporate and governmental levels.;

    JEL classification:

    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification
    • P28 - Economic Systems - - Socialist Systems and Transition Economies - - - Natural Resources; Environment
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • A13 - General Economics and Teaching - - General Economics - - - Relation of Economics to Social Values
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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