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The effects of the underground economy on economic competitiviness

Author

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  • Donici, Gabriel-Andrei/GA

Abstract

A real, almost palpable, connection exists between the official and the underground economy. More than that, both sides of the economy (official and underground) are connected with the competitiveness of a country. Strangely a large presence of undereground in the economy is a sign of competitiveness. Although we would be tempted to say that underground is bad for competitiveness the reality is that due to taxes and regulations the resources (especially the human ones) used ”illegaly” would probably be wasted. In the end the wages from the underground economy return to the oficial one suporting it and hence the competitiveness of the country.

Suggested Citation

  • Donici, Gabriel-Andrei/GA, 2012. "The effects of the underground economy on economic competitiviness," MPRA Paper 36025, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:36025
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    File URL: https://mpra.ub.uni-muenchen.de/36025/1/MPRA_paper_36025.pdf
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    More about this item

    Keywords

    official economy; underground economy; illegal activities; tax evasion; economic competitiveness;

    JEL classification:

    • E26 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Informal Economy; Underground Economy
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance

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