What is the meaning of hidden economy

The hidden economy, or shadow economy, is an economic activity that is not reported to the government. It is an informal sector of the economy that is not included in the official GDP (Gross Domestic Product) calculations. It is an underground economy that is not regulated by the government and is not subject to taxation. It includes activities such as bartering, street vending, and informal employment.

The hidden economy is a global phenomenon, and it is estimated to account for up to 20% of the world’s total economic activity. It is not a new phenomenon, but it has grown in recent years due to globalization, technological advances, and changes in government policies. The hidden economy is often associated with illegal activities, such as drug trafficking, money laundering, and tax evasion. However, there are also legitimate activities that are part of the hidden economy, such as bartering and informal employment.

The hidden economy has both positive and negative effects. On the one hand, it can provide employment opportunities for those who are excluded from the formal economy. On the other hand, it can lead to tax evasion, money laundering, and other criminal activities. In addition, it can lead to a decrease in government revenue, as taxes are not collected on the hidden economy activities.

The hidden economy is an important part of the global economy, and it is important for governments to understand its implications. Governments need to ensure that the hidden economy is not used for criminal activities, and that taxes are collected on activities that are part of the hidden economy. In addition, governments need to ensure that the informal sector is not exploited, and that workers in the hidden economy are protected and provided with decent working conditions.

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