Shadow economy: ukrainian realities

Olga Kudlasevych
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Olga Kudlasevych: State Organization «Institute for Economics and Forecasting of the National Academy of Sciences of Ukraine»

Economic Synergy, 2026, issue 1, 196-206

Abstract: The article is devoted to the historical and economic study of the shadow economy, as a complex socio-economic phenomenon that poses a challenge in the mechanism of ensuring sustainable economic development. The purpose of this article is to study the development of the shadow economy, in particular, to study the prerequisites for the formation of the shadow sector of the economy, its place and role in the functioning of the economic system of Ukraine. The methodological basis is made up of general scientific and specific methods of cognition, which determines the conceptual unity of the work. The theoretical and methodological basis of the study is the principles of objectivity, systematicity and historicism. The conceptual and categorical apparatus of cooperative theory is studied using a logical-functional approach using the methods of induction and deduction, analogy and comparison. Based on the analysis, the historical trajectory of the development of the shadow sector of the economy is traced, trends and cause-and-effect relationships that have determined the current state of the shadow sector in Ukraine are revealed. The main reasons for the growth of the shadow sector in the administrative-planning system are identified, and forms of illegal entrepreneurship are revealed. The study summarizes new manifestations of shadowing of the economy as a result of market transformations of the economy and determines that illegal practices and their consolidation in a transformational society have led to macroeconomic imbalances and structural changes in socio-economic development. The authors focus on the process of de-shadowing in 2014–2021, which has become unprecedented in the scale of reforming state institutions in Ukraine, emphasizing that the most successful reforms were those that increased the transparency of the state, and did not resort exclusively to punitive mechanisms. The impact of the war in Ukraine on the volume of the shadow economy is determined, and it is shown that under martial law, the shadow sector partially fulfills the traditional role of a buffer that mitigates the impact of crisis phenomena on population incomes and restrains the growth of unemployment.

Keywords: shadow economy; illegal activity; shadow scheme; illegal income; economic crisis; de-shadowing; post-war reconstruction (search for similar items in EconPapers)
JEL-codes: A11 M21 N10 (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:bja:isteus:y:2026:i:1:p:196-206

DOI: 10.53920/ES-2026-1-13

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