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HOW PARTICIPATING IN THE SHADOW ECONOMY AFFECTS THE GROWTH OF LATVIAN FIRMS

Nino Kokashvili, Irakli Barbakadze and Ketevani Kapanadze

No 101, University of Tartu - Faculty of Economics and Business Administration Working Paper Series from Faculty of Economics and Business Administration, University of Tartu (Estonia)

Abstract: This paper examines the relationship between the growth of Latvian firms and their involvement in the shadow economy in 2015. When up to 10% of the overall economic activity of firms is in the shadow economy, this had a growth-enhancing effect on firms that recorded non-positive growth during the last five years. Using the perceptions of corruption and interview languages as instruments of measuring the shadow economy participation rate, the authors conclude that there is a positive relationship between perceptions of corruption and the shadow economy participation rate.

Keywords: Shadow Economy; Firm Growth; Company Managers; Latvia (search for similar items in EconPapers)
JEL-codes: O17 E26 E24 J46 J28 D22 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cis, nep-iue, nep-mac and nep-tra
Date: 2017
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