The Underground Economy in Romania

Abstract

In recent decades, the underground economy has become an obstacle to economic development, all the more so neither its size nor its evolution are known exactly. The activities associated with the phenomenon of the underground economy are concrete realities, met throughout the world. For a state to be able to efficiently allocate resources, it is essential to have information about the magnitude of the underground economy, the activities involved in this process and their frequency, the people involved. However, it is very difficult to analyze and measure the underground economic activities, the labor force or the goods involved, since the people involved in this type of activities do not want to be identified. The purpose of this paper is to quantify the size of the Romanian underground economy and to identify the main factors that contribute to its growth.

Keywords

• tax evasion
• corruption
• underground economy