Published in 1999, this work examines the crucial role played by unofficial and underground activities in the transitional economies of Central and Eastern Europe and new independent states. Countries undergoing radical transformations from socialism to capitalism experience fundamental changes in institutional rules governing property rights, government regulations, taxation and the appropriate conduct of public service. Underground and unofficial activities represents non-compliant economic behaviours involving evasion, avoidance, circumvention, abuse and/or corruption of the institutional rules as well as efforts to conceal these illicit behaviours from the view of public authorities. The book employs the conceptual framework of the new institutional economics to elaborate the theoretical relationship between underground activities and overall performance of transition economies. The social, cultural and economic causes of unofficial activities are examined as well as their consequences for economic policy and performance. Policy issues include the relationship between tax evasion and corruption, the underground economy and organized crime, state and regulation, and methods and consequences of legalization of the underground economy.
Introduction, Feige, Ott. Part I: General Issues. 1. Underground Economies in Transition: Noncompliance and Institutional Change, Feige. 2. Economic Policy and Underground Economy in Transition, Ott. 3. Between Opportunism and Distrust: Socio-Cultural Aspects of the Underground Economy in Croatia, Stulhofer. Part II: Policy Issues. 4. Tax Policy, Tax Evasion and Corruption in Economies Transition, Bowles. 5. Polices Dealing with Tax Evasion, Sandford. 6. Russia’s Underground Economy During the Transition, Glinkina. 7. Political Economy of the Unofficial Economy: The State and Regulation, Franicevic. Part III: Measurement Issues. 8. Electricity Intensity and the Unrecorded Economy in Post-Socialist Countries, Lacko. 9. Measuring the Underground Economy by the System of National Accounts, Madzarevic, Mikulic. 10. Assessment of the Underground Economy in Agriculture, Industry and Trade, Mikulic, Madzarevic. 11. Measuring Employment in the Unofficial Economy by Using Labor Market Data, Crnkovic-Pozaic. Hidden Labor in Poland, Kalaska, Witkowski. 13. The Spatial Distribution of the Informal Marketplaces and Informal Foreign Traders in Contemporary Hungary, Sik.