The Shadow Economy is Retreating: An Example of Georgia

Open access

Abstract

The economy of Georgia had corruptive characteristics at the end of the last century and that has largely contributed to the existence of high-scaled shadow economy. Tax avoidance by entrepreneurs is considered to be the main cause of shadow economy1 (Gabidzashvili, Kbiladze, 2010). The methodological measurement and assessment of the shadow economy is characterized by certain peculiarities; therefore, we have aimed to examine and assess the scale of shadow economy and its impact on the overall economy of Georgia. The research shows several differences between real indicators, obtained by interviewers using hidden chronometry, and those indicators declared by entrepreneurs (the non-traditional method of research). The differences reveal unregistered micro-level economy, and provide the basis for determining the scale of shadow economy on the macroeconomic level. This problem was discussed several times by the president of Georgia. The research uses methods of average values, time series and the correlation-regression analysis of data. The study allowed us to identify the pattern of shadow economy reduction in Georgia during recent years and its shifting from the illegal to legal sectors, also, the maintenance of same trends before 2020.

Gabidzashvili, B., Kbiladze, D. Tactics and Strategy of Businessmen behavior in Economically Uncertain Conditions, p. 223.

Jie, S.W., Tat H.H.,Rasli.(2011). Underground Economy: Definition and Causes, Business and Management Review, Vol. 1 (2) p. 14-24;

Lequiller, F., Blades, D. (2014). Understanding National Accounts, OECD Publishing, Second Edition, p. 516.

National Statics Office of Georgia. (2000). Activity of restaurants in Tbilisi City and near-by districts (Sample Statistical survey results), p. 38.

Papava,V.(2002). Political Economy of Post-communist Capitalism and Economy of Georgia, p. 526.

Schneider, F., Williams, C. (2013). The Shadow Economy, the Institute of Economic Affairs; London, Profile Books Ltd, 184 p.

Schneider, F. (2012). The Shadow Economy and Work in the Shadow: What Do We (Not) Know? IZA Discussion Paper No. 6423, 73 p.

Schneider, F. (2015). Size & Development of the Shadow Economy of 31 European and 5 Other OECD Countries from 2003 to 2014: Different Developments? Journal of Self-Governance and Management Economics, Vol 3, Issue 4, p. 7-29.

Schneider, F. (2007). Shadow Economies and Corruption All over the World: New estimates for 145 Countries, E-journal Economics, No. 2007-9, p. 3-47.

Stiglitz, E., Sen, A., and Fitoussi J., (2009). Report by the Commission on the Measurement of Economic Performance and Social Progress. P.291 http://www.insee.fr/fr/publications-et-services/dossiers_web/stiglitz/doc-commission/RAPPORT_anglais.pdf

Иванов, Ю Н., (2014). К вопросу о включении в ВВП оценки нелегальной деятельности, Журнал вопросы статистики, N 3/2014, С. 46-49.

Ekonomika (Economics)

Research Papers

Journal Information

Metrics

All Time Past Year Past 30 Days
Abstract Views 0 0 0
Full Text Views 141 141 24
PDF Downloads 84 84 14