engleski

Corruption and Underground Economy-Two Sides of the Same Coin?

This paper examines the link between the underground economy and corruption and the related influence of tax burdens, transition reforms and government effectiveness. We have tested if the underground economy and corruption are complements, rather than substitutes in new EU member states and candidate countries. The comparable data according to the EUROSTAT method of estimation of the size of underground economy in 2000 were employed. Econometric modelling confirmed that there is a significant positive relation between the underground economy and corruption so they do indeed act as complements. The influence of government effectiveness and even stronger impact of transition progress on corruption contribute indirectly to the lower size of underground economy.

corruption; underground economy; transition progress

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