Shadow Economies and Corruption All Over the World - Index of - IZA

5 Summary and Conclusions
There have been many obstacles to overcome to measure the size of the shadow economy, to
analyze its consequences on the official economy and the interaction between corruption and
the shadow economy, but as this paper shows some progress has been made. I provided
estimates of the size of the shadow economies for 145 countries for three periods of time
(1999/2000, 2001/2002 and 2002/2003) using the DYMIMIC and the currency demand
approach. Coming back to the question in the headline of this paper, some (new)
knowledge/insights are gained with respect to the size and development of the shadow
economy of developing, transition, highly developed OECD, Pacific Islands and Communist
countries, 30) and to the relationship between the shadow economy and corruption leading to
five conclusions:
The first conclusion from these results is that for all countries investigated the shadow
economy has reached a remarkably large size; the summarized results are shown in table 5.1.
Table 5.1: Average Size of the Shadow Economy for Developing, Transition and OECD-
Countries in % of official GDP
Average Size of the Shadow Economy – Value added in % of
official GDP using DYMIMIC and Currency Demand
Countries/Year
method (Number of Countries)
Mostly developing countries: 1999/2000 2000/2001 2002/2003
Africa 41.3
(37)
Central and South America 41.1
(21)
Asia 28.5
(28)
Transition countries
38.1
(25)
Highly developed OECD
Countries
16.8
(21)
South Pacific Islands 31.7
(10)
Communist Countries 19.8
(3)
Unweighted Average over 145
Countries
Source: Own calculations.
42.3
(37)
42.1
(21)
29.5
(28)
39.1
(25)
16.7
(21)
32.6
(10)
21.1
(3)
43.2
(37)
43.4
(21)
30.4
(28)
40.1
(25)
16.3
(21)
33.4
(10)
22.3
(3)
33.6 34.5 35.2
30) In the appendix some critical discussion of these two methods is given, they have well known weaknesses,
compare also Pedersen (2003).
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