What is a shadow economy?


There are no production processes that the law does not allow to deal with or because dealing with it requires a permit or government knowledge, and otherwise it is considered a legal offense to be held accountable by law.

The first type includes drug trafficking, trade in expired materials, the role of prostitution, piracy, bribery of employees, the sale and purchase of human organs, smuggling of people from country to country, smuggling of rare animals and extinction.
The second section includes goods and services that are not documented either evading the payment of government taxes or the resultant instructions, such as smuggling goods to avoid paying customs taxes on them, or the work of a citizen in the work of electrical maintenance without permission from the government or union, or the use of workers are not authorized to work, Or work outside of the official office, such as a taxi driver after his official time.

He did not provide the government with data on the amount of income from this work or a nurse who treats some patients after the end of their official work.

The shadow economy (sometimes called the black market or the secret economy) is common in all countries of the world, but its spread is wider in the third world.

Some statistics account for about 36% of the national economy. The disparity in the ratio is due to the difficulty of regulating the labor market in developing countries.

For example, it is not possible for the Iraqi government now to demand that construction workers report on their day's work, their daily wages, and pay a portion of their income as a tax.

It is also unreasonable for the government to ask roving restaurant owners about their sales volume, cost of sales and profits from sales. In fact, 50% of production operations in Iraq are not included in the accounts of national production, because the government does not ask about them and the home does not like to pay taxes on them.
There are occupations and characters and works in Iraq, which earn millions of dinars a day without paying a penny to the treasury of the state!

The lack of data on the volume of transactions in goods and services under the name of a shadow economy deprives governments of important confiscation from sources of income.

For example, the US shadow economy accounts for 8 percent of national production, or $ 2 trillion, a figure that represents a loss of $ 200 billion a year for the state treasury.

In California, the shadow economy accounts for between 15% and 17% or between $ 60 billion and $ 140 billion, and a loss of state income of between $ 8.5 billion and $ 28 billion a year.

The prosperity of the shadow economy in developed countries deprives many government programs of funding, especially education programs, social aid programs, training programs, and other important economic programs.

In developing countries, however, the shadow economy does not provide a financial resource for governments, but it is the economy that is driving the country's economy.
The income of the construction worker, becomes an income for the cattle and the butcher, the farmer, and the clothing vendor. As well as the income of the farmer becomes an income for motor cars, stables, doctor and barber.

Thus, the greater the share of this economy in the national economy, the greater the public demand and the greater the economic growth.

The shadow economy in developing countries allows citizens to improve their living standards. One farmer has to sell his products on the market or on the road to buy additional furniture for his home or television or send his children to school.

Or a governmental worker in the water network sector has to work after the official hours and on holidays to build a fence for the department. Or one of the young women as a kindergarten teacher in the homes of those who are able to collect some money to spend on her education, or to give the teacher additional lessons for students of Baccalaureate in order to provide a better economic life for his children.

The shadow economy is spreading in difficult economic times in developed countries. In the great economic recession that hit the US economy in 2008-2009, many laid-off workers were forced to work in secondary jobs (construction workers, car repair workers, restaurant workers, car washers) in violation of health insurance laws and working conditions. The financial difficulties they experienced.

In the economic recession, the government-sanctioned business sector is flourishing, but law-abiding businesses thrive, such as drug trafficking, the sale of unlicensed weapons, the spread of prostitution, the recovery of human organ trade and trafficking in antiquities.

A good example of this is the flourishing of this trade in Iraq due to the absence of job opportunities at present. Therefore, the responsibility of governments to double their citizens in the days of economic crises, providing employment opportunities for those who are able and willing to work, and fighting dealing with illegal goods and services.

Iraq can not progress economically without developing its economic sectors, raising the standard of living for citizens, and respecting the patriotism of its citizens in the old age. Iraq will reach this level, when the Iraqi citizen takes part in the financial burden (paying taxes), when he is strong and productive, so that the asset is in the old (social security with retirement).

The current situation does not bear, everyone wants government aid, social welfare, pension and ration card, but no one has the desire to pay the rights of the state it. The Iraqi citizen must emerge from the shadow economy.