The effects of the underground economy on economic competitiviness

Gabriel Donici

MPRA Paper from University Library of Munich, Germany

Abstract: A real, almost palpable, connection exists between the official and the underground economy. More than that, both sides of the economy (official and underground) are connected with the competitiveness of a country. Strangely a large presence of undereground in the economy is a sign of competitiveness. Although we would be tempted to say that underground is bad for competitiveness the reality is that due to taxes and regulations the resources (especially the human ones) used ”illegaly” would probably be wasted. In the end the wages from the underground economy return to the oficial one suporting it and hence the competitiveness of the country.

Keywords: official economy; underground economy; illegal activities; tax evasion; economic competitiveness (search for similar items in EconPapers)
JEL-codes: E26 H26 (search for similar items in EconPapers)
Date: 2012-01-06
New Economics Papers: this item is included in nep-cse and nep-iue
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