Globalization of shadow economic actiity

Globalization
of shadow
economic
activity

Contents
Part 1: Introduction
Part 2: Components Part 3: Causes Part 4: Pros and cons

Introduction
The shadow economy, also known as the informal economy or underground economy, refers to economic activities that are conducted outside of the formal sector and are not reported to the government for tax or regulatory purposes. These activities are often characterized by alack of transparency, accountability, and legal oversight.
The shadow economy includes all market-based legal production of goods and services that are deliberately concealed from public authorities.

Components of shadow
economy
The shadow economy can include a wide range of activities, such as. Unreported work Individuals working off the books or engaging in cash transactions to avoid paying taxes or complying with labor regulations. Informal businesses Small businesses operating without proper licenses,
permits, or tax registrations. Illegal activities Criminal enterprises involved in drug trafficking, human trafficking, counterfeiting, and other illicit activities. Tax evasion Individuals and businesses underreporting income or engaging in fraudulent practices to avoid paying taxes. Informal financial transactions Money laundering, unregulated lending, and other financial activities conducted outside of the formal banking system.

Causes...
regulations
Shadow economy prohibitions corruption taxes

Causes of the shadow economy can vary depending on the country and its economic, social, and political conditions. Some common factors contributing to the growth of the shadow economy include High tax rates and complex tax systems that create incentives for individuals and businesses to evade taxes.
Excessive regulations and bureaucratic red tape that make it difficult for businesses to operate legally.
Lack of access to formal financial services, leading individuals to rely on informal financial networks.
Weak enforcement of laws and regulations, allowing for widespread noncompliance and illicit activities.
Economic instability, high unemployment rates, and low wages that drive individuals to seek alternative sources of income.
Corruption and lack of transparency in government institutions that undermine trust in the formal economy.

Impacts
on:
EQUITY;
MARKET COMPETITION;
TAX SYSTEM.

Recommendations for
legalization
reducing the tax burden by systematic tax reforms
reducing the burden of cotributions by reforming the
social security systems
consolidating the public sector and making
administrations more effficient
allocating transfer payments according to the
principle of neediness
decreasing density of regulation
more flexibility instead of forced reduction of
working time

Disadvantages
Advantages
Pros and Cons..
.
Increased employment opportunities
Increased total revenues
Competition rises
Debt crisis
Rise in Inflation
Wrong statistical data
Huge tax losses

New results on the shadow economy for 158 countries allover the world are presented over to 2015. Strengths and weaknesses of these methods are assessed and a critical comparison and evaluation of the methods is carried out. The average size of the shadow economy of the countries over 1991 to 2015 is percent. The largest ones are
Zimbabwe with 60.6 percent, and
Bolivia with 62.3 percent of GDP.
The lowest ones are Austria with percent, and Switzerland with percent. Overall, while the shadow economy can have some positive impacts on globalization, such as promoting economic growth and innovation, its negative consequences, such as tax evasion, unfair competition, and lack of consumer protection, can pose challenges to sustainable development and inclusive globalization. Efforts to address the root causes of the shadow economy, improve regulatory frameworks,
enhance enforcement mechanisms, and promote transparency and accountability are essential to mitigate its negative impacts and foster a more equitable and sustainable global economy.

Thank
Thank
Thank you!
you!
you!