Shadow Economy in Tourism: Some Conceptual Considerations from Croatia

Open access

Abstract

Although the importance of tourism for the Croatian economy is widely recognized and well documented, the issues related to the existence of shadow economy in tourism are not yet fully investigated and resolved. In spite of many attempts to estimate the size and impacts of shadow economy in tourism, there is still much controversy regarding the scope of the research area and the appropriateness of methodological approaches used to quantify this complex phenomenon. The present study aimed to (1) summarize the existing body of empirical evidence related to the shadow economy in tourism, with special reference to the case of Croatia, and to (2) shed some more light on additional aspects and variables which have been found to be important determinants for better understanding of the nature of the shadow economy in tourism. In order to reduce the adverse impacts of the shadow economy in tourism, some policy recommendations are suggested.

Asea, P.K. (1996). The Informal Sector: Baby or Bath Water? Carnegie-Rochester Conference Series on Public Policy, 45, 163-171. DOI: 10.1016/S0167-2231(96)00022-X

Badariah, H.D., Habibullah, M.S. & Baharom, A.H. (2015). Does the Shadow Economy Matter for Tourism? International Evidence. Taylor’s Business Review, 5(1), 1-9. URL: http://www.taylors.edu.my/tbr/uploaded/2015_vol5_issue1_p1.pdf

Bajada, C. (1999). Estimates of the underground economy in Australia. Economic Record, 75(4), 369-384. DOI: 10.1111/j.1475-4932.1999.tb02573.x

Bejaković, P. (2015), A revision of the shadow economy in Croatia: causes and effects. Economic Research, 28(1), 422-440 DOI: 10.1080/1331677X.2015.1059104

Berrittella, M. (2015). The Effect of Public Education Expenditure on Shadow Economy: A Cross-Country Analysis. International Economic Journal, 29(4), 527-546. DOI: 10.1080/10168737.2015.1081259

Bićanić, I. & Ott, K. (1997). The unofficial economy in Croatia: Causes, size and consequences. Occasional paper No. 3. Zagreb: Institute of Public Finance.

Caridi, P. & Passerini, P. (2001.). The underground economy, the demand for currency approach and the analysis of discrepancies: Some recent European experience. Review of Income and Wealth, 47(2), 239-250. DOI: 10.1111/1475-4991.00014

CBS. (2017a). Tourism in 2016. Statistical Reports No. 1594. Zagreb: Croatian Bureau of Statistics.

CBS. (2017b). Tourist Arrivals and Nights in 2016. First Release, Year: LIII, No. 4.3.2. Zagreb: Croatian Bureau of Statistics.

CBS. (2017c). Non-Profit Tourism Activity in 2016. First Release, Year: LIII, No. 4.3.3. Zagreb: Croatian Bureau of Statistics.

CBS. (2013). Census of Population, Households and Dwellings 2011. Statistical Reports, No. 1469. Zagreb: Croatian Bureau of Statistics.

Chen, M. (2006). Linking the formal and informal economy. Oxford, London: Oxford University Press.

CNB. (2017). Bulletin, No. 223, Year XXIII, Zagreb: Croatian National Bank.

Crnković-Pozaić, S. (1997). The unofficial economy measured by labour force data (in Croatian). Financijska praksa, 21(1/2), 169-194.

De Soto, H. (1989), The Other Path: The Invisible Revolution in the Third World. London: I.B. Tauris.

Dell’Anno, R., Gómez-Antonio, M. & Pardo, A. (2006). The shadow economy in three Mediterranean countries: France, Spain and Greece. A MIMIC approach. Empirical Economics, 33(1), 51-84. DOI 10.1007/s00181-006-0084-3

Din, B.H., Habibullah, M.S., Baharom, A.H. & Saari, M.D. (2016). Are Shadow Economy and Tourism Related? International Evidence. Procedia Economics and Finance, 35, 173-178. URL: https://doi.org/10.1016/S2212-5671(16)00022-8

Dreher, A., Kotsogiannis, C. & McCorriston, S. (2005). How do institutions affect corruption and the shadow economy? International Tax and Public Finance, 16(6), 773. DOI: 10.1007/s10797-008-9089-5

Dreher, A. & Schneider, F. (2010). Corruption and the shadow economy: an empirical analysis. Public Choice, 144(1), 215-238. DOI: 10.1007/s11127-009-9513-0

Eilat, Y. & Zinnes, C. (2000). The Evolution of the Shadow Economy in Transition Countries: Consequences for Economic Growth and Donor Assistance. CAER II Discussion Paper No. 83. Cambridge: Harvard Institute for International Development. URL: http://pdf.usaid.gov/pdf_docs/PNACK691.pdf

Eurostat (2017). Tourism intensity in 2015. URL: http://ec.europa.eu/eurostat/statistics-explained/index.php/File:Tourism_intensity,_2015_(nights_spent_by_residents_and_non-residents_at_tourist_accommodation_establishments_per_inhabitant)_V2.png

Feige, E. L. (1990). Defining and estimating underground and informal economies: The new institutional economics approach. World Development, 18(7), 989-1002. DOI: 10.1016/0305-750X(90)90081-8

Fleming, M.H., Roman, J. & Farrell, G. (2000). The Shadow Economy. Journal of International Affairs, 53(2), 387-409. URL: http://www.jstor.org/stable/24357758

Georgiu, M.N. (2013). Shadow Economy and House Prices: A Panel Data Analysis in EU, USA, Japan. DOI: 10.2139/ssrn.2370424

Glinkina, S. (1999). Russia’s Underground Economy During the Transition. In E.L. Feige & K. Ott (Eds.), Underground Economies in Transition: Unrecorded Activity, Tax Evasion, Corruption and Organized Crime (pp. 43-63). Aldershot: Ashgate.

Hjalager, A.M. (2008). The Illegal Economy in the Restaurant Sector in Denmark. Tourism and Hospitality Research. 8(3), 239-251. URL: Ivandić, N., Marušić, Z., Šutalo, I. & Vuglar, J. (2014). Tourism Satellite Account for Croatia in 2011 and the calculation of indirect and total impacts of tourism in Croatia (in Croatian). Zagreb: Ministry of Tourism and Institute for Tourism.

Ivandić, N. & Radnić, A. (1997), The size of unofficial economy in tourism and hospitality (in Croatian). Financijska praksa, 21 (1/2), 231-240.

Jankov, Lj. (1997). The monetary form of the unofficial economy (in Croatian). Financijska praksa, 21 (1/2), 157-168. URL: http://www.ijf.hr/hr/publikacije/caopisi/12/financijska-teorija-i-praksa/104/vol-21-1997/226

Katsios, S. (2006). The shadow economy and corruption in Greece. South-Eastern Europe Journal of Economics, 4(1), 61-80. URL: http://www.asecu.gr/Seeje/issue06/katsios.pdf

Kesner-Škreb, M. (1997). The unofficial economy and development (in Croatian). Financijska praksa, 21(1/2), 315-327.

Kurnoga Živadinović, N. & Groznica, M. (2012). Estimating The Share Of Employees In The Unofficial Economy In Croatia. Economic Review, 63(1-2), 73-86. URL: http://hrcak.srce.hr/78939

Lovrinčević, Z., Mikulić, D. & Galić Nagyszombaty, A. (2011). Unofficial economy in Croatia and the impact of the economic recession on the unofficial economy. In Z. Reić & V. Šimić (Eds.), Conference proceedings challenges of Europe: Growth and competitiveness reversing the trends (pp. 479-908). Split: University of Split, Faculty of Economics.

Lovrinčević, Ž., Marić, Z. & Mikulić, D. (2006), Maastricht Criteria and the Inclusion of the Underground Economy - the Case of Croatia (in Croatian). Privredna kretanja i ekonomska politika, 16(106), 30-65. URL: http://hrcak.srce.hr/file/28742

Lovrinčević, Ž., Mikulić, D. & Nikšić-Paulić, B. (2002). Estimate of the Underground Economy in Croatia in the Period 1998-1999 According to the Eurostat Methodology (in Croatian). Economic Trends and Economic Policy, 11(89), 76-121. URL: http://hrcak.srce.hr/file/29179

Madžarević-Šujster, S. & Mikulić, D. (2002). An Estimate of the Underground Economy Via the National Accounting System (in Croatian). Financijska teorija i praksa, 26(1), 31-56. URL: http://www.ijf.hr/FTP/2002/1/madzarevic-sujster&mikulic.pdf

Milić, M. (2014). Phenomenon of Grey Economy and its Forms in the Montenegro Economy (in Croatian), Business Excellence, 8(1), 65-80. URL: http://hrcak.srce.hr/123570

Mirus, R. & Smith, R.S. (1997). Canada’s Underground Economy: Measurement and Implications. In O. Lippert & M. Walker (Eds.), The Underground Economy: Global Evidence of its Size and Impact. Vancouver: Fraser Institute.

Ott, K. (1997). Economic policy and unofficial economy (in Croatian). Financijska praksa, 21(1-2), 29-45. Zagreb: Institute of Public Finance.

Ott, K. (2002). The underground economy in Croatia 1990-2000. Occasional Paper No. 12. Zagreb: Institute of Public Finance. URL: http://www.ijf.hr/OPS/12.pdf

Pavičević, R. (2014). Tourism destroys the shadow economy. CG Economist Online. CG Economist online. URL: http://www.cgekonomist.com/?broj=12&clanak=641&lang=en

Rimac, K. (2012), Analysis of the structural characteristics and trends in shadow economy in Croatian tourism (in Croatian). Master thesis, Zagreb: Faculty of Economics & Business.

Schneider, F. (2016). Estimating the size of the shadow economies of 162 countries using the MIMC method. In A. Sauka, F. Schneider & C.C. Williams (Eds.), Entrepreneurship and the Shadow Economy (pp. 30-59). Cheltenham: Edward Elgar Publishing.

Schneider, F. (2015). Size and Development of the Shadow Economy of 31 European and 5 other OECD Countries from 2003 to 2015: Different Developments. Linz: Johannes Kepler Universität. URL: http://www.econ.jku.at/members/Schneider/files/publications/2015/ShadEcEurope31.pdf

Schneider, F. (2009). Size and Development of the Shadow Economy in Germany, Austria and Other OECD Countries: Some Preliminary Findings. Revue Economique, 60, 1079-1116.

Schneider, F. (2008). Shadow Economy. In C.K. Rowley & F. Schneider (Eds.), Readings in Public Choice and Constitutional Political Economy (pp. 511-532), New York: Springer.

Schneider, F., Buehn, A. & Montenegro, C.E. (2011). Shadow economies all over the world: New estimates for 162 countries from 1999 to 2007. In F. Schneider (Ed.), Handbook on the Shadow Economy (pp. 9-77). Cheltenham: Edward Elgar Publishing.

Schneider, F. & Enste, D.H. (2013). The Shadow Economy: An International Survey. Cambridge: Cambridge University Press.

Schneider, F. & Enste, D.H. (2000). Shadow Economies: Size, Causes, and Consequences. Journal of Economic Literature, 38(1), 77-114. URL: http://faculty.nps.edu/relooney/Schneider.pdf

Skalpe, O. (2007). The Hidden Economy in Tourism (Circumstantial Evidence from the Hotels and Restaurants in Norway). In Chang, P.R. (Ed.). Tourism Management in the 21st Century (337- 351). New York: Nova Science Publishers.

Slocum, S.L., Backman, K.F. & Robinson, K.L. (2011). Tourism Pathways to Prosperity: Perspectives on the Informal Economy in Tanzania. Tourism Analysis, 16, 43-55. URL: https://www.researchgate.net/profile/Susan_Slocum/publication/233652336_Tourism_Pathways_to_Prosperity_Perspectives_On_the_Informal_Economy_in_Tanzania/links/56a1743408ae27f-7de266fb5.pdf

Stučka, T. (2002). The Underground Economy in tourism (in Croatian). Financijska teorija i praksa, 26(1), 173-195. URL: http://www.ijf.hr/FTP/2002/1/stucka.pdf

Šergo, Z., Gržinić, J. & Zanini-Gavranić, T. (2017). Shadow Economy and Tourism Receipts: Evidence from Europe. Interdisciplinary Management Research XIII. Opatija: Faculty of Economics in Osijek, J.J. Strossmayer University of Osijek and Hohchschule Pforzheim University.

Štulhofer, A. (1999). Between Opportunism and Distrust: Socio-Cultural Aspects of the Underground Economy in Croatia. In E.L. Feige & K. Ott (Eds.), Underground Economies in Transition: Unrecorded Activity, Tax Evasion, Corruption and Organized Crime (pp. 43-63). Aldershot: Ashgate.

Švec, M. (2009). Underground Economy in Croatia (in Croatian). Financijska teorija i praksa, 33(4), 415-444. URL: http://hrcak.srce.hr/48594

Tan, Y.L., Habibullah, M.S. & Yiew, T.H. (2016). The Shadow Economy in Malaysia: Evidence from an ARDL Model. International Journal of Economics and Management, 10(2), 2161-277. URL: http://econ.upm.edu.my/ijem/vol10no2/(4)-VOL_10(2)2016_Yan-Ling_The%20Shadow%20Economy......pdf

Tanzi, V. ed. (1982). The Underground Economy in the United States and Abroad. Lexington: D.C. Heath.

Torgler, B., & Schneider, F.G. (2007). The impact of tax morale and institutional quality on the shadow economy. CESifo working paper, No. 1899. URL: https://www.econstor.eu/bitstream/10419/25944/1/529371960.PDF

UNWTO. (2017). Tourism Highlights 2017 Edition. Madrid: United Nations World Tourism Organization.

Visa Europe, AT Kearney & Schneider, F. (2013). The Shadow Economy in Europe, 2013. Linz: Johannes Kepler Universität. URL: http://www.visaeurope.com/en/newsroom/news/articles/2013/shadow_economy_report.aspx.

Viksne, D. & Mazure, G. (2011). Shadow Economy and its Relation to the Tax System of Latvia. In Economic Science for Rural Development, 28-29 April 2011 (pp. 219-228). Jelgava, Latvia: Latvia University of Agriculture.

Vladimirov, Z. (2015). Factors for the e-business adoption by small tourism firms and the role of shadow economic practices. European Journal of Tourism Research 10, 5-34. URL: https://www.google.com/books?hl=hr&lr=&id=vkonDwAAQBAJ&oi=fnd&pg=PA5&dq=Factors+for+the+e-business+adoption+by+small+tourism+firms&ots=C5BkHC36Vi&sig=gtIJg5dguEcHJV92poVslgAAQQk

Vukšić, G. (2009). Croatian Balance of Payments: Implications of Net Errors and Omissions for Economic Policy. Newsletter No. 41. Zagreb: Institute of Public Finances.

WTTC. (2017a). Travel & Tourism: Global Economic Impact & Issues 2017. London: World Travel & Tourism Council.

WTTC. (2017b). Travel & Tourism: Economic Impact 2017 - Croatia. London: World Travel & Tourism Council.

Zhang, H. (2017). Understanding the Informal Economy in Hospitality and Tourism: A Conceptual Review. Pomona: California State Polytechnic University.

Journal Information

Cited By

Metrics

All Time Past Year Past 30 Days
Abstract Views 0 0 0
Full Text Views 276 263 17
PDF Downloads 157 151 9