Social and Economic Aspects of the Shadow Economy in the Republic of Macedonia: A Study

Abstract

It is a notorious fact that the GDP of the Republic of Macedonia would have noted significantly higher amounts and rates of real growth if the transitional development cycle and the numerous shocks that the national economy had in the past 15-16 years would not have caused big structural disorders in the economy. This has led to permanent growth of the number of unemployed people in the Republic of Macedonia. Those people had to provide their existence in different possible manners, primarily in the informal sector, through their active participation in different channels of the so-called shadow economy.

The shadow economy is a pervasive phenomenon in the national economy, creating vicious cycle that consists of several malignant points, the first and foremost being the severe structural unemployment rate. This paper tries to ponder into the main causes and consequences of the shadow economy, giving an overview of its main socio-cultural and economic aspects. The research is based on primary data gathered through a survey conducted over 1200 respondents, on a representative example by: gender, ethnicity, age and regional distribution of the population in the Republic of Macedonia. The survey was conducted directly with the respondents based on the “door-to-door” system.

Keywords: shadow economy, informal economy, grey economy

JEL Classification: O17