Black economy
Black economy, shadow economy or black market is the type of market, which is operating non-compliant with the regulations breaking them and potentially invovling transfer of illegal goods between parties. Black economy in not controlled by any government, and that is why it is called black or shadow. Governments of different countries fight with black economies, as they directly impact on policymaking, macroeconomic growth of the coutnry, quality of life, investments in the country and many other factors (A. Kumar, 2016). Depending on the size of the black economy, it will affect differently the live in the country. If the shadow economy is huge, the impact of this economy will be large and it will be impacting the whole population. For instance, in countries, where the size of black market is small, it is almost neglectable and these countries tend to be more developed, as shadow economy has no real power (A. Kumar, 2016).
Defining black economy
There are many exampels of black economy, some of them are drug and human trafficking, prostitution, illegal currency transactions and weapon trading (A. Horning, C. Thomas, A. Marcus and J. Striken, 2018). All of these activities are prohibited and they are strictly proescuted by the governments of many countries. Shadow economy is damaging the real economy of the country, as it is uncontrollable and there are no regulations. There are no limits for the prices of goods, and the taxes from such transactions are not paid to the tax office. This is the reason, why many countries try to estimate the size of black market in their countries, to understand how much money and illegal activity is going unnoticed (A. Kumar, 2016).
Because black economy is not being regulated by the government it is breaking other people's freedom and rights very often. For instance, in cases of human trafficking and prostitution, the rights of individuals can be severely broken and neglected.
Money laundering
Characteristics of black economy
Below are listed the charateristics that can be assigned to black economy:
References
- Caneppele S., Riccardi M. and Standridge P. (2013). Green energy and black economy: mafia investments in the wind power sector in Italy. Crime Law Soc Change, Vol. 59, 319–339.
- Horning A., Thomas C., Marcus A. and Sriken J. (2018), Risky Business: Harlem Pimps’ Work Decisions and Economic Returns. Deviant Behavior.
- Kumar A. (2016), Estimation of the Size of the Black Economy in India, 1996–2012. Economic & Political Weekly, Vol. 48.
Author: Nikita Shtemenko
