Shadow Economies: Size, Causes, and Consequences

2000 ◽  
Vol 38 (1) ◽  
pp. 77-114 ◽  
Author(s):  
Friedrich Schneider ◽  
Dominik H Enste
Keyword(s):  
Developing Countries ◽  
Shadow Economy ◽  
Driving Forces ◽  
Positive Impact ◽  
Oecd Countries ◽  
Gdp Growth ◽  
State Regulations ◽  
Shadow Economies ◽  
Negative Effect ◽  
Average Size

Using various methods, the size of the shadow economy in 76 developing, transition, and OECD countries is estimated. Average size varies from 12 percent of GDP for OECD countries, to 23 percent for transition countries and 39 percent for developing countries. Increasing taxation and social security contributions combined with rising state regulations are driving forces for the increase of the shadow economy, especially in OECD countries. According to some findings, corruption has a positive impact on the size of the shadow economy, and a growing shadow economy has a negative effect on official GDP growth.

scholarly journals Institutional Analysis of Shadow Economy (Study on ASEAN 7 Developing Countries)

2020 ◽  
Vol 15 (1) ◽  
pp. 55
Author(s):  
Ana Rahmawati Wibowo ◽  
Wiwin Indrayanti
Keyword(s):  
Developing Countries ◽  
Rule Of Law ◽  
Shadow Economy ◽  
Secondary Data ◽  
Political Stability ◽  
Government Effectiveness ◽  
Regulatory Quality ◽  
Negative Effect ◽  
And Control ◽  
Control Of Corruption

This study aims to analyze the institutional variables of governance in ASEAN 7 developing countries. The independent variables consist of Voice and Accountability, Political Stability and Absence of Violence, Government Effectiveness, Regulatory Quality, Rule of Law and Control of Corruption, while shadow economy is dependent variable. The data used in this study are quantitative data and secondary data by using program Stata 14, the analysis technique used is multiple linear regression panel data. The results show that Voice and accountability has a negative and significant effect on the shadow economy as well as Political stability, Government effectiveness and Control of corruption on the other side. Regulatory quality has a positive and significant effect on the amount of shadow economy. Meanwhile, Rule of law no significant effect on the shadow economy. Underlying the results, the study arranges some policy to reduce negative effect of shadow economy.

THE ROLE OF FINANCIAL INSTITUTION MARKETIZATION IN CHINA’S INDUSTRIAL CONTESTABILITY

2018 ◽  
Vol 63 (05) ◽  
pp. 1245-1261
Author(s):  
XIAOHUI HOU ◽  
CHENG LI ◽  
QING WANG
Keyword(s):  
Financial Institutions ◽  
Firm Size ◽  
Conditional Distribution ◽  
Positive Impact ◽  
Financial Institution ◽  
Negative Effect ◽  
Size Of Firms ◽  
Average Size ◽  
Number Of Firms

In this paper, we investigate how the marketization of financial institutions affects China’s industrial contestability. Our empirical results show that a higher degree of marketization of financial institutions is significantly associated with both the operation of more firms and the smaller average size of firms. Moreover, the lower and upper quartiles of the conditional distribution of firm size are all significantly negatively associated with the higher marketization degree of financial institutions, whereas increased financial institution competition and market-oriented allocation of credit funds have greater negative effect on the average size of larger firms, relative to smaller firms. In sum, improvements on the degree of marketization of financial institutions lead to an increase in the number of firms and a reduction in the average size of firms in China’s industry. Therefore, the marketization of financial institutions has a significant positive impact on China’s industrial contestability.

scholarly journals The Dynamic Relationship between Inequality and Sustainable Economic Growth

2020 ◽  
Vol 12 (14) ◽  
pp. 5740 ◽  
Author(s):  
Hwan-Joo Seo ◽  
HanSung Kim ◽  
Young Soo Lee
Keyword(s):  
Economic Growth ◽  
Developing Countries ◽  
Income Inequality ◽  
Growth Model ◽  
Capital Accumulation ◽  
Negative Impact ◽  
Positive Impact ◽  
Dynamic Relationship ◽  
Negative Effect ◽  
Sustainable Economic Growth

This study empirically tests the effects of income inequality on growth for 43 countries from 1991 to 2014 based on a cumulative growth model. The results show that, first, the estimation results using a reduced equation reveal a positive correlation between the income inequalities of lagging countries and the respective growth gaps with the frontier country. This confirms that the increase in income inequality negatively affects growth. Secondly, a cumulative growth model using 3SLS estimation shows that income inequality has a negative effect only on investment. However, we fail to find correlations between technological innovation and income inequality and between human capital accumulation and income inequality. Considering that investment has a positive impact on productivity, we conclude that income inequality has a negative impact on investment and that the resulting sluggish investment has a negative impact on productivity, which in turn negatively influences growth. Third, contrary to Kaldor and Barro’s prediction, we find that income inequality in developing countries is negatively correlated with growth, particularly for investment. The effects of income inequality on investment are found to be similar in both developed and developing countries. We also find region-specific differences in the paths through which income inequality affects sustainable economic growth.

Income inequality and shadow economy: a nonparametric and semiparametric analysis

2018 ◽  
Vol 45 (1) ◽  
pp. 2-13 ◽  
Author(s):  
Wai Weng Yap ◽  
Tamat Sarmidi ◽  
Abu Hassan Shaari ◽  
Fathin Faizah Said
Keyword(s):  
Developing Countries ◽  
Income Inequality ◽  
Shadow Economy ◽  
Semiparametric Regression ◽  
Developed Countries ◽  
Oecd Countries ◽  
Nonlinear Relationship ◽  
Content Type ◽  
Semiparametric Analysis ◽  
The Relationship

Purpose The purpose of this paper is to investigate the nonlinear relationship between shadow economy and income inequality and determine whether the size of shadow economy can influence the level of income inequality. Design/methodology/approach Both parametric (panel OLS) and nonparametric/semiparametric regression suggested by Robinson (1988) will be used to capture the dynamic nonlinear relationship between these variables using unbalanced panel data of 154 countries from 2000 to 2007. Additionally, the relationship between income inequality and shadow economy on both developed and developing countries will be analyzed and compared. Findings First, semiparametric analysis and nonparametric analysis are significantly different than parametric analysis and better in nonlinear analysis between income inequality and shadow economy. Second, income inequality and shadow economy resemble an inverted-N relationship. Third, the relationship between income inequality and shadow economy is different in developed countries (OECD countries) and developing countries, where OECD countries have similar inverted-N relationship as before. However, for developing countries, income inequality and shadow economy show an inverted-U relationship, similar to the original Kuznets hypothesis. Practical implications This study suggests that there is a possible trade-off between income inequality and shadow economy and helps policy makers in solving both problems effectively. Originality/value Despite the growing importance of income inequality and shadow economy, literature linking the two variables is scarce. To the best of the authors’ knowledge, there is no literature that nonlinearly links these two variables. Furthermore, the dynamics of the relationship between these two variables in developed countries and developing countries will be explored as well.

Trade openness and sectoral growth in developing countries: some new insights

2019 ◽  
Vol 12 (2) ◽  
pp. 90-103 ◽  
Author(s):  
Muhammad Tahir ◽  
Tooba Mazhar ◽  
Muhammad Asim Afridi
Keyword(s):  
Developing Countries ◽  
Service Sector ◽  
Positive Impact ◽  
Trade Openness ◽  
Content Type ◽  
Positive Effects ◽  
Industrial Sectors ◽  
Sectoral Growth ◽  
Negative Effect ◽  
The Impact

Purpose The trade–growth nexus has been researched during the past few decades. However, the impact of trade openness on different sectors of the economy is not well explored. The purpose of the current study is to focus on developing countries to examine the impact of trade openness on three main sectors: industrial, service and agricultural. Design/methodology/approach The study applied econometric techniques that control unobserved heterogeneity and endogeneity to obtain robust and reliable results. Findings The results revealed that trade openness impacts different sectors differently. Trade openness positively impacts agriculture and industrial sectors, whereas it negatively affects the service sector. A similar trend is observed with regard to employment as it affects service sector negatively and creates a positive impact on other sectors, namely, agriculture and industrial sectors. Furthermore, it was found that human capital has a negative effect on all sectors, whereas financial development has positive effects on service and industrial sectors and negative effect on agriculture sector. The results are robust because of the method of estimation and the addition of some relevant variables. Practical implications The policymakers should focus on trade in agricultural and industrial sectors and should discourage trade in the service sector. Originality/value This study has examined the impact of trade openness on sectoral growth by focusing on the developing world, which is an under-researched area in the literature.

IS tRNA DRIVING BREAST CANCER PROGRESSION?

2019 ◽  
Author(s):  
Zil-e- Rubab
Keyword(s):  
Breast Cancer ◽  
Gene Expression ◽  
Developing Countries ◽  
Molecular Mechanism ◽  
Cancer Progression ◽  
Critical Review ◽  
Driving Forces ◽  
Treatment Modalities ◽  
Critical Research ◽  
Research Article

This critical research periodical is mainly based on critical review of research article titled ‘Modulated Expression of Specific tRNAs Drives Gene Expression and Cancer Progression published in Cell by Goodarzi et al1. According to Globocan, 2008 report2, breast is among the leading site of new cancer cases and deaths (691,300/268,900) in females of developing countries and second leading site in USA (Globocan, 2012)3. The extensive research is in progress on different aspects of molecular mechanism of driving forces and different treatment modalities to ease this burden. The above mentioned research article is also part of this effort.

scholarly journals Impact of Economic Freedom on Corruption Revisited in ASEAN Countries: A Bayesian Hierarchical Mixed-Effects Analysis

Economies ◽  
2021 ◽  
Vol 9 (1) ◽  
pp. 3
Author(s):  
Nguyen Ngoc Thach ◽  
Bui Hoang Ngoc
Keyword(s):  
Economic Freedom ◽  
Positive Impact ◽  
Mixed Effects ◽  
Random Coefficients ◽  
Bayesian Hierarchical ◽  
Country Level ◽  
Corruption Index ◽  
Negative Effect ◽  
Economic Freedom Index ◽  
Asean Countries

Conceptual and applied studies assessing the linkage between economic freedom and corruption expect that economic freedom boosts economic growth, improves income, and reduces levels of corruption. However, most of them have concentrated on developed and developing groups, while Association of Southeast Asian Nations (ASEAN) countries have drawn much less attention. Empirical findings are most often conflicting. Moreover, previous studies performed rather simple frequentist techniques regressing one or some freedom indices on corruption that do not allow for grasping all the aspects of economic freedom as well as capturing variations across countries. The study aims to investigate the effects of ten components of economic freedom index on the level of corruption in ten ASEAN countries from 1999 to 2018. By applying a Bayesian hierarchical mixed-effects regression via a Monte Carlo technique combined with the Gibbs sampler, the obtained results suggest several findings as follows: (i) In view of probability, the predictors property rights, government integrity, tax burden, business freedom, labor freedom, and investment freedom have a strongly positive impact on the response perceived corruption index; (ii) Government spending, trade freedom, and financial freedom exert a strongly negative effect, while the influence of monetary freedom is ambiguous; (iii) There is an existence of not only random intercepts but also random coefficients at the country level impacting the model outcome. The empirical outcome could be of major importance for more efficient corruption controlling in emerging countries, including ASEAN nations.

scholarly journals Natural Disasters and Economic Growth: The Mitigating Role of Microfinance Institutions

2021 ◽  
Vol 13 (9) ◽  
pp. 5055
Author(s):  
John Sseruyange ◽  
Jeroen Klomp
Keyword(s):  
Developing Countries ◽  
Natural Disasters ◽  
Legal Status ◽  
Agricultural Sector ◽  
Banking System ◽  
Fe Model ◽  
Microfinance Institutions ◽  
Natural Event ◽  
Negative Effect

In this study, we explore whether microfinance institutions (MFIs) can mitigate the adverse macroeconomic consequences of natural disasters. The provision of capital immediately following a natural event is recognized as one of the necessary conditions for a fast economic recovery. However, one concern is that a large majority of natural disasters occur in developing countries where households and the private sector have only limited access to the formal banking system. As an alternative, MFIs may fill up this gap in providing liquidity in the form of microcredit. The existing evidence on how MFIs respond to disaster effects is foremost based on case and micro-level evidence. In turn, the focus of this study is more on the macro impact of MFI activities after a natural disaster. Based on the finding obtained from an OLS-FE model using an unbalanced panel considering more than 80 developing countries and emerging economies, we can conclude that natural disasters harm macroeconomic performance primarily through their effect on the agricultural sector. However, access to lending facilities from MFIs mitigates a large part of this negative effect. Moreover, the extent to which MFIs are able to mitigate these effects depends to a great extent on their nature, i.e., their organizational structure, profitability, legal status, age, and the number of clients they serve.

scholarly journals The Relationship between Strategic Orientation, Service Innovation, and Performance in Hotels in Angola

2021 ◽  
Vol 13 (11) ◽  
pp. 6256
Author(s):  
Gerdina Handa Serafim ◽  
José Manuel Cristóvão Veríssimo
Keyword(s):  
Developing Countries ◽  
Customer Orientation ◽  
Positive Impact ◽  
Group Analysis ◽  
Strategic Orientation ◽  
New Business ◽  
Competitor Orientation ◽  
And Performance ◽  
Technology Orientation ◽  
The Impact

This paper aims to investigate the impacts of customer orientation, competitor orientation, learning orientation, technology orientation, and entrepreneurial orientation on hotel innovation and performance. Data from 69 hotels in four Angolan provinces were analyzed using the partial least squares (PLS) approach and multi group analysis. The results show that learning and entrepreneurial orientations have a positive impact on hotel innovation. As anticipated, innovation has a positive impact on performance. According to the multigroup analysis, only the hotel category has a moderating effect on performance. Results suggest that hotels in developing countries could add value to both customers and shareholders by promoting new services and exploring new business opportunities. To the best of our knowledge, this is one of the few studies that has researched the impact of strategic orientation on hotel innovation and financial performance in developing countries.

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