SHADOW ECONOMY: UKRAINIAN CASE
Journal Title: VADYBA - Year 2012, Vol 20, Issue 1
Abstract
The article is devoted to the describing of shadow economy in Ukraine and proposing methods to legalize it. In Ukraine shadow economy has some special features. It can be considered as the only possible behavior of entrepreneurs in the conditions of social and economic instability, legislative and administrative confusion. Deep-rooted corruption creates auspicious environment for existing of shadow sector. So there’re special methods to fight against this phenomenon and they’re examined in this article. Shadow economy can be divided into two groups: crime and corruption and entrepreneurs who are forced to hide their incomes. First group includes drugs and weapons trade, racketeers, corrupt officials. Criminal structures act mostly in the sphere of distribution and redistribution of profits. Second group of shadow economy includes shadow entrepreneurs who are unsatisfied with tax burden and different barriers in doing business. Shadow entrepreneurs are the most interested in changing the situation as it will increase life quality in the country. To struggle with shadow economy it’s important to estimate its volume. The latter is done in the article according to the Ukrainian government and foreign experts. Thus, according to the Ministry of Economic Development and Trade of Ukraine, which is responsible for this indicator, shadow economy is equal to approximately one third of Ukraine’s GDP. These data don’t coordinate with the reports provided by relevant international institutions and foreign scientists. For example, the latest available result of World Bank’s investigations shows that it is a half of the GDP. Recently adopted Ukrainian laws are analyzed in the article as to their efficiency in the field of prevention of corruption, such as first Tax Code of Ukraine, the Law on Access to Public Information and the Law on Prevention and Combating Corruption. Methods to legalize shadow economy in Ukraine are proposed, for example creation of favorable environment for business development, improvement of tax system, overcoming of illegal labor market, raising of public awareness, enforcement of capacity of power, strict punitive measures for corruption and raiders, minimizing of government regulation of various spheres of life, etc. Mechanisms proposed in this article will help to reduce the shadow economy and to increase the efficiency of legal economy.
Authors and Affiliations
Illia Savchenko
Keywords
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