Bukhtiarova Alina, PhD in Economics, Associate Professor, Associate Professor of the Department of Finance, Banking and Insurance, Sumy State University, Sumy, Ukraine

ORCID ID: 0000-0003-2631-3323
e-mail: а.bukhtiyarova@uabs.sumdu.edu.ua

Semenog Andrii, PhD in Economics, Associate Professor, Associate Professor of the Department of Finance, Banking and Insurance, Sumy State University, Sumy, Ukraine

ORCID ID: 0000-0003-3222-9574
e-mail: a.semenoh@uabs.sumdu.edu.ua

Mykhalova Alona, Master student of the Department of Finance, Banking and Insurance, Sumy State University, Sumy, Ukraine

e-mail: alionaverkhoglyad02@gmail.com

Shadow Economy: Causes and Ways to De-shadow Economic Processes

Annotation. Introduction. The spread of the shadow economy is a significant obstacle to the sustainable development of Ukraine’s economy and its entry into the world community. It negatively affects all economic processes. In Ukraine, the scale of the shadow economy has reached a critical level, so it is vital to find ways to minimize the shadow economy as essential prerequisites for increasing economic security of the state.

Purpose. The purpose of the article is to discover the essence of the concept of the shadow economy, to find out the leading causes of the shadow economy and identify ways to de-shadow economic processes.

Results. The article analyzes the approaches to the interpretation of the essence of the concept of the shadow economy on the basis of the analysis of the foreign researchers` scientific achievements. The characteristic of its constituent elements has been presented. It has been determined that the shadow economy can take the form of covert, informal and illegal. The level of the shadow economy in Ukraine has been considered. It has been substantiated that the shadow sector of the economy exists regardless of the level of development of the national economy. At the same time, in some countries, it has no significant impact on the economy (5-12% of GDP), and in others – has a detrimental effect on all socio-economic processes (over 30% of GDP). ). It has been emphasized that Ukraine belongs to the second group of countries with a high level of the shadow economy. Also, the main factors that lead to the formation of the shadow economy have been substantiated. Ways to overcome the shadow economy to strengthen Ukraine’s economic security have been proposed.

Conclusions. To overcome the negative consequences of the process of shadowing the economy, it is necessary to develop and implement several measures to combat it. The state policy on the de-shadowing of Ukraine’s economy requires the development and application of a set of tools, assessment of the impact (social and economic effects) on the real and financial sectors of the economy, stimulation of entrepreneurial activity. An essential factor in the success of de-shadowing is political support for this complex process, a sequence of actions to reform society, avoid populism and punish irresponsible activities of officials, change the mentality of citizens towards awareness of civic position and involvement in the overall process.

Keywords: shadow economy; shadowing; de-shadowing; shadow sector of the economy.

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