Shadow market: causes

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Shadow market: causes
Shadow market: causes

There are many unexplored topics in economics. One of the most interesting is the shadow market. Why? The fact is that this is such an example when one can say that at the same time the scale of an economic phenomenon and the degree of its study are simply incomparable. The shadow market covers all spheres of society and is of considerable interest to researchers.

General information

shadow market

The shadow economy and the market is an extremely difficult topic to research. This phenomenon can be quite easily identified. But to accurately measure it is a matter of extreme complexity. Why? The fact is that information can be obtained either from people detained by law enforcement officers, which casts doubt on it because of the person’s desire to appear clean, or on confidential grounds. In other words, it is not envisaged that data on the working mechanisms will be disclosed.

Why is the shadow market of interest to us?

shadow market as a factor of market imbalance

Why study it? First of all, this is necessary in order to understand how it affects ordinary economic processes such as income generation, distribution, investment, trade, economic activity.growth and more. Moreover, in many countries the shadow market has such a great influence that it poses a danger to the state. The Russian Federation was no exception to this rule. Only lazy people do not talk about the great influence of the criminal sector, which is a derivative of this problem. Moreover, the shadow market in Russia has such a tendency that it can increasingly decide the direction of political and socio-economic processes. Only an active civil society can reverse the current situation, when each person understands that it is necessary to act primarily for the benefit of mutually beneficial common interests.

What is the shadow economy?

shadow economy and market

Performance results may or may not be included in GDP indicators. The first refers to various areas of activity that are not prohibited by law, while the second refers to postscripts, fraud, and so on. Conventionally, the following areas in the manufacturing sector can be distinguished here:

  1. Legal type of activity for which a license is required, but the enterprise operates without it.
  2. Prohibited economic activity.

Besides them, there are also sectors of the community and home economy. They are unregulated and uncontrolled. Because of this, the community and household economy tend not to show up in the statistics. And if they are there, then their figures are only approximate.

Why is shearises?

shadow labor market

What is the reason why there is a shady black market? The answer will vary for different regions of the world, but conditionally they can be divided into three groups:

  1. Economic factors. The most famous and at the same time classic example of the cause of the occurrence is too high taxes. When more than 50% of the enterprise's profit is taken by the state, then the subject of economic activity begins to lose incentives to conduct economic activity. At least officially. And many enterprises, in order to get more profit, go into the shadows. Also, this process may be a consequence of the poor general state of the economy and / or the crisis of the financial system. In this case, moving to the shadow sector can turn out to be a lot of advantages for the company that cover possible risks.
  2. Social factors. The low standard of living of the population contributes significantly to the fact that hidden types of economic activity are beginning to be conducted. The high unemployment rate also contributes to this. Because of this state of affairs, a certain part of the population begins to focus on earning income in any way possible. In addition, the delay or non-payment of wages, the flow of refugees can add their influence - all this is a nutrient ground for the growth of the shadow market. When they say that a tenth of the adult working population may not work for years, believe me, this is not true. Yes, there are precedents, but they are rather exceptions.
  3. Legal factors. This includes elementaryimperfection of legislation.

These are the reasons why the shadow market exists.

Can this sector of the economy be useful?

Russian shadow market

Oddly enough, the answer is yes. Usually, the shadow sector of the economy means the slave trade, the sale of drugs, weapons, money laundering. Of course, these are negative aspects, the elimination of which should be worked on.

But there are also positive elements. First of all, these are the previously mentioned sectors of the community and home economies. The first includes economic activity, which is aimed at producing and selling goods and services that are aimed at exchange in non-monetary form. It operates only within the framework of certain communities, which are formed on the basis of certain ties: relatives, friends, neighbors, and the like. The home economy, on the other hand, is focused on labor activity, which allows you to create products that replace goods bought with money. An example is a vegetable garden.

Should useful sectors of the shadow economy really be included?

There is a wide discourse on this issue. Many experts argue that the community and household economy should not be considered part of the shadow market. As an argument, arguments are given that there is no shelter from taxation and accounting, official registration and payment of taxes are not provided. In addition, such activities are not of a criminal nature. ATIn this case, the shadow market does not act as a factor in disrupting the market equilibrium, which is why the question of the appropriateness of such an approach is often raised.

What is the scale?

shady black market

This is a very difficult task. The reason for this state of affairs lies in the nature of the shadow market. The economy in this case is hidden. Therefore, different, as a rule, indirect methods are used for this purpose.

Let's explore the shadow labor market. According to the latest data, it is estimated that approximately 8 trillion US dollars of added value is created every year, which does not fall into official statistics. This volume is comparable to the size of the largest economies in the world. As a percentage, the size ranges from 10 to 40 percent of the size of GDP. At the same time, the more developed and comfortable the country for entrepreneurial activity, the higher the standard of living and the more reliable the institutions, the lower this indicator. Of course, there are countries that fall outside the above range. Negative examples include Nigeria and Thailand. It is believed that the shadow sector in these countries is more than 70% of the entire economy. Not far behind them are Egypt, Bolivia and Panama. At the same time, very interesting trends are observed.

The work of the shadow sector

causes of the shadow market

Practically in most countries of Asia, Latin America and Africa there is a parallel economy, which is not much inferior in scale to the official one. That said, an interesting comparison. So ifconsider the USA, Germany, France and, to some extent, Russia, it is characteristic that, as a rule, small firms work in the shadow sector. At the same time, earnings are considered as an additional source of income and support for economic activity.

In Latin America, Asia and Africa the situation is different. There is quite a wide migration from the countryside. At the same time, people can rarely find work in the legal sector. As a result, they have to settle in the shadow economy. This is largely facilitated by widespread corruption and numerous flaws in the legislation. Special attention in general terms is given to post-socialist countries. Here the saddest things are in the states of the Caucasus and Central Asia. The size of the shadow sector in these territories is approximately twice as large as that observed on average in the Russian Federation.

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