The Impact of National Economic Development on the Shadow Economy
Romualdas Ginevicius, Tomas Kliestik, Andrius Stasiukynas, Karel Suhajda
Keywords:
macroeconomic, GDP per capita, shadow economy
Abstract:
A country’s competitiveness depends primarily on its economic development which in turn is affected
by a number of factors. Some of these, such as investment, favorable business conditions,
legal environment, etc., promote economic development, while others, such as low labor productivity,
insufficient staff qualification that fails to meet the requirements of the labor market, etc.,
slow down the pace of economic development. The latter category describes the phenomenon
of the shadow economy (SE). Research into shadow economies is dominated by the analysis of
the local impact factors. Nevertheless, the results of such analyses do not reveal the general patterns
of the shadow economy, without the knowledge of which it is difficult to develop effective
preventive measures. The basic determinants of the shadow economy must first and foremost
reflect national economic development, as these particular determinants have the most significant
impact on the size of the phenomenon of the shadow economy. National economic development
can be expressed by employing various indicators, but recently it has most commonly
been expressed by GDP per capita. GDP reflects national competitiveness, integrates a number
of domestic factors, and is easily accessible and publicly available in national and international
statistical sources. In addition, this indicator is calculated by employing a unified methodology,
which makes it universal, allowing the comparison of countries in different situations. As presented
in this article, the analysis of the relationship between economic development and the
size of the shadow economy allows the division of all the EU member states into characteristic
groups by the level of their economic development as well as size of the country’s SE. Our research
attempts to reveal the regularity of the above-mentioned relationship: the higher the level
of national economic development, the lower the size of the shadow economy.
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 The Impact of National Economic Development on the Shadow Economy [PDF file] [Filesize: 1.08 MB]
 10.7441/joc.2020.04.03
Ginevicius, R., Kliestik, T., Stasiukynas, A., & Suhajda, K. (2020). The Impact of National Economic
Development on the Shadow Economy. Journal of Competitiveness, 12(3), 39–55. https://doi.org/10.7441/joc.2020.04.03
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