How e-Government Affects the Shadow Economy: A Further Analysis

Nguyen Doan, Canh Phuc Nguyen and Binh Quang Nguyen

International Economic Journal, 2025, vol. 39, issue 2, 274-314

Abstract: This study re-examines the influence of e-government development on the shadow economy. Empirical analysis is carried out for a sample of 148 countries from 2003 to 2020. First, the negative effects of e-government on the size of the shadow economy as a percentage of GDP are re-affirmed across the globe. Second, telecommunication infrastructure is likely the main factor explaining how e-government affects the shadow economy. Third, the negative effects of e-government are less in countries with high economic uncertainty, large government size, or a greater portion of the services sector, while there is statistically insignificant evidence that e-government might have a greater negative effect in countries with a socialist history, a civil law system, one major religion, or a strong state history. Fourth, panel autoregressive distributed lag estimates show that e-government may increase the shadow economy in the short term, but it reduces the shadow economy significantly in the long term. Fifth, e-government increases the absolute value of the shadow economy. The findings suggest that e-government adoption might provide benefits for both the official and unofficial economies, although the benefits for the official economy outperform those for the unofficial economy, particularly in the long run.

Date: 2025
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DOI: 10.1080/10168737.2025.2456156

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