shadow economies on the rise around the world

8/9/2019 Shadow Economies on the Rise Around the World

1/6

Shadow Economies on the Rise Around the

World

by Chris Prentice, Intern for Bloomberg NewsFriday, July 30, 2010

Excerpt from Yahoo Finance website

The Countries with the Biggest 'Shadow Economies'

Global Tax Evasion

Despite what many might argue, paying taxes is one of the cornerstones of a healthy economy.More and more citizens around the world are avoiding taxes by operating businesses off the data

grid. The boom in "shadow economies" leaves governments insufficient revenue to provideadequate public services, whether that means health care, roads, education, or even better taxcollection. In fact, a new report estimates that in 2007, in 162 countries, an average of 35.5percent of official gross domestic product slipped through the cracksnot counting any fruitsfrom such illegal activities as drug dealing or organized crime. Friedrich Schneider, aneconomics professor at Austria's Johannes Kepler University of Linz and a co-author of thereport, "Shadow Economies All Over the World: New Estimates for 162 Countries from 1999 to2007," emphasizes that the study's numbers refer only to the amount unpaid by individuals andbusinesses avoiding taxes or legal labor requirements. The problem is on the rise both indeveloped and developing nations. The worst offender is the former Soviet republic of Georgia,where an estimated 72.5 percent of GDP was untaxed in 2007. The U.S., while not immune to

shadow economic problems, is the world's least-affected country, with a mere 9.0 percent oflegally derived GDP escaping the IRS that year.

1. Georgia

Percent of GDP in Shadow Economy: 72.5*Official GDP: $20.29 billion**

Population: 4,600,825Labor Force by Occupation:Agriculture: 55.6 percent

Industry: 8.9 percentServices: 35.5 percent (2006 est.)

Industries: steel, aircraft, machine tools, electrical appliances,mining (manganese and copper), chemicals, wood products, wine

Exports: scrap metal, wine, mineral water, ores, vehicles, fruits and nuts

Bloomberg


2/6

*For all slides this figure is the result for 2007.

**All data for population, GDP, labor force by occupation, industries and exports for allcaptions is from the CIA's World Factbook, 2010 ed.

2. Bolivia

Percent of GDP in Shadow Economy: 70.7Official GDP: $45.11 billion

Population: 9,947,418Labor Force by Occupation:Agriculture: 40 percentIndustry: 17 percentServices: 43 percent

Industries: mining, smelting, petroleum, food and beverages,tobacco, handicrafts, clothing

Exports: natural gas, soybeans and soy products, crude petroleum, zinc ore, tin

3. Azerbaijan


Population: 8,303,512

Labor Force by Occupation:Agriculture: 38.3 percentIndustry: 12.1 percentServices: 49.6 percent

Industries: petroleum and natural gas, petroleum products, oilfield equipment, steel, iron ore, cement, chemicals and petrochemicals, textiles

Exports: oil and gas (90 percent), machinery, cotton, foodstuffs

4. Peru

Bloomberg

Bloomberg


3/6

Percent of GDP in Shadow Economy: 66.3Official GDP: $253 billion


Labor Force by Occupation:

Agriculture: 0.7 percentIndustry: 23.8 percentServices: 75.5 percent

Industries: mining and refining of minerals, steel, metalfabrication, petroleum extraction and refining, natural gas, fishing and fish processing, textiles,clothing, food processing

Exports: copper, gold, zinc, crude petroleum and petroleum products, coffee, potatoes,asparagus, textiles, fishmeal

5. Tanzania


Population: 41,892,895*

Labor Force by Occupation:Agriculture: 80 percentIndustry and Services: 20 percent (2002 est.)

Industries: agricultural processing (sugar, beer, cigarettes,sisal twine), diamond, gold, and iron mining, salt, soda ash,

cement, oil refining, shoes, apparel, wood products, fertilizer

Exports: gold, coffee, cashew nuts, manufactures, cotton

*Estimates for this country explicitly take into account the effects of excess mortality due toAIDS; this can result in lower life expectancy, higher infant mortality, higher death rates, lower

population growth rates, and changes in the distribution of population by age and sex thanwould otherwise be expected.

6. Ukraine

Bloomberg

Bloomberg


4/6




Agriculture: 15.8 percentIndustry: 18.5 percentServices: 65.7 percent

Industries: coal, electric power, ferrous and nonferrousmetals, machinery and transport equipment, chemicals, food processing

Exports: ferrous and nonferrous metals, fuel and petroleum products, chemicals, machinery andtransport equipment, food products

7. Thailand


Population: 66,404,688*Labor Force by Occupation:Agriculture: 42.4 percentIndustry: 19.7 percentServices: 37.9 percent

Industries: tourism, textiles and garments, agriculturalprocessing, beverages, tobacco, cement, light manufacturing such as jewelry and electricappliances, computers and parts, integrated circuits, furniture, plastics, automobiles andautomotive parts, world's second-largest tungsten producer and third-largest tin producer

Exports: textiles and footwear, fishery products, rice, rubber, jewelry, automobiles, computersand electrical appliances

*Estimates for this country explicitly take into account the effects of excess mortality due toAIDS; this can result in lower life expectancy, higher infant mortality, higher death rates, lower

population growth rates, and changes in the distribution of population by age and sex thanwould otherwise be expected.

8. Zimbabwe

Bloomberg

Bloomberg


5/6

Percent of GDP in Shadow Economy: 56.1Official GDP: $332 million

Population: 11,651,858*


Agriculture: 66 percentIndustry: 10 percentServices: 24 percent

Industries: mining (coal, gold, platinum, copper, nickel, tin,clay, numerous metallic and nonmetallic ores), steel, wood products, cement, chemicals,fertilizer, clothing and footwear, foodstuffs, beverages

Exports: platinum, cotton, tobacco, gold, ferroalloys, textiles/clothing

*Estimates for this country explicitly take into account the effects of excess mortality due to

AIDS; this can result in lower life expectancy, higher infant mortality, higher death rates, lowerpopulation growth rates, and changes in the distribution of population by age and sex than

would otherwise be expected.

9. Uruguay



Labor Force by Occupation:Agriculture: 9 percentIndustry: 15 percentServices: 76 percent (2007 est.)

Industries: food processing, electrical machinery,transportation equipment, petroleum products, textiles, chemicals, beverages

Exports: meat, rice, leather products, wool, fish, dairy products

10. Guatemala

Bloomberg

Bloomberg


6/6




Agriculture: 50 percentIndustry: 15 percentServices: 35 percent (1999 est.)

Industries: sugar, textiles and clothing, furniture, chemicals, petroleum, metals, rubber, tourism

Exports: coffee, sugar, petroleum, apparel, bananas, fruits and vegetables, cardamom

Bloomberg

shadow economies on the rise around the world

Documents