Shadow economy

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Contents.     Introduction.................................................................................................2 Definition of the shadow economy and its structure. .................................3 The principal causes of corruption of economy. ......................................11 Reasons of growth and shadow economy development in the Post-Soviet Space. ..............................................................................................................13  Fun
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  Contents.  Introduction.................................................................................................2  Definition of the shadow economy and its structure. .................................3  The principal causes of corruption of economy. ......................................11  Reasons of growth and shadow economy development in the Post-SovietSpace. ..............................................................................................................13  Functions and scales of the shadow economy in modern Russia. ............18  Shadow economy development in the world……………………………..…22  Positive effect of the shadoweconomy……………………………………...23  Conclusion. ...............................................................................................24  References.................................................................................................27 1  Introduction. The shadow economy problem has arisen at all yesterday. It is presented worldwide.The basic distinctions of shadow economy in the different countries is its specific weight in realeconomy. In the European countries specific weight of shadow economy is not as great as inRussia. For example, if the “shadow component of GNP of the developed countries isevaluated as 5-10 %, in Russia - about 50 % in average-industry significance. In the world listfof 85 countries Russia takes of 76th position and enters into big six of the countries with themost developed shadow economy. In Russia the tendency of growth of shadow sector ineconomy is observed. And it bears a fatal influence on all spheres of economic activities.The shadow sector plays an ambiguous role in economy. On the one hand, its reticencefrom the taxation increases competitive advantages of the enterprises practicing shadowactions, allows to receive additional revenues to the workers who is involved in it, reduces thelevel of real unemployment. On the other hand, functioning of shadow sector aggrieves to a public finance and indirectly - to other economic agents who are active within the law. Thelarge part of researchers consider shadow economy basically as a negative phenomenon.Evaluating a state of affairs on the given problem, it is necessary to reveal the scales of the shadow sector, possibilities of its influence on economy as a whole and aspects of struggling against the criminalization of economic activities, and also to study reforminginfluence, as important factor of influence on economy.And in connection with these problems, the coursework’s purpose is to study andevaluate position of criminalization in economy of Russia, and also the influence rendered byshadow sector on economy as a whole.The ratio of positive and negative consequences of existence in national economy of shadow sector depends on its scales. Under certain conditions economy criminalization turns tothe dominating, backbone process advancing a direction of development of all social andeconomic system and conditioning for the reproduction. Concrete social and economicconsequences of shadow economy are extremely diverse, as this activity is diverse andversatile.2  Definition of the shadow economy and its structure. Underground economy is subject, which is very complicated for the research. This is the phenomenon which could be easily defined but can not be exactly estimated, because all theinformation, gained is confidential and is not to be made public.The underground economy or black market is a market where all commerce is conductedwithout regard to taxation, law or regulations of trade. The term is also often known as theunderdog, shadow economy, black economy, parallel economy or phantom trades.In modern societies the underground economy covers a vast array of activities. It is generallysmallest in countries where economic freedom is greatest, and becomes progressively larger inthose areas where corruption, regulation, or legal monopolies restrict legitimate economic activity.Goods acquired illegally take one of two price levels:They may be cheaper than legal market prices. The supplier does not have to pay for  production costs or taxes. This is usually the case in the underground market for stolen goods.Criminals steal goods and sell them below the legal market price, but there is no receipt, guarantee,and so forth.They may be more expensive than legal market prices. The product is difficult to acquire or  produce, dangerous to handle or not easily available legally, if at all. If goods are illegal, such assome drugs, their prices can be vastly inflated over the costs of production.Black markets can form near the borders of neighboring jurisdictions with little or no border control if there are substantially different tax rates, or where goods are legal on one side of the border but not on the other. Products that are commonly smuggled like this include alcohol andtobacco.Even when the underground market offers lower prices, most consumers still buy on the legalmarket when possible, because:  They may prefer legal suppliers, as they are easier to contact and can be heldaccountable for faults  In some jurisdictions, customers may be charged with a criminal offence if theyknowingly participate in the black economy, even as a consumer.  They may feel in danger of being hurt while making the deal  They may have a moral dislike of black marketers3  In some jurisdictions (such as England and Wales), consumers in possession of stolen goodswill have them taken away if they are traced, even if they did not know they were stolen. Thoughthey themselves commit no offence, they are still left with no goods and no money back. This risk makes some averse to buying goods that they think may be from the underground market, even if in fact they are legitimate (for example, items sold at a car boot sale).But some actively prefer the underground market, particularly when government regulationshinder what would otherwise be a legitimate service. For example:Unlicensed taxicabs. In Baltimore, it has been reported that many consumers actively prefer illegal taxis, citing that they are more available, convenient, and priced fairly.Highly marginalized groups, such as illegal immigrants, may effectively be excluded fromthe legal economy and thus may undertake most of their purchases and employment in theunderground economy. Traded goods and services. In developed countries, some examples of underground economic activities include: Transportation providers Where taxicabs, buses, and other transportation providers are strictly regulated or monopolized by government, a black market typically flourishes to provide transportation to poorly served communities. In the United States, some cities restrict entry to the taxicab marketwith a medallion system— that is, taxicabs must get a special license and display it on a medallionin the vehicle. This has led to a market in illegal taxicab operation.  Illegal drugs From the late 19th and early 20th centuries, many countries began to ban the keeping or using of some recreational drugs, such as the United States' war on drugs. Many peoplenonetheless continue to use illegal drugs, and a black market exists to supply them. Despite lawenforcement efforts to intercept them, demand remains high, providing a large profit motive for organized criminal groups to keep drugs supplied. The United Nations has reported that the retailmarket value of illegal drugs is $321.6 billion USD.Although law enforcement officers do capture a small proportion of the illegal drugs, thehigh and very stable demand for such drugs ensures that black market prices will simply rise inresponse to the decrease in supply—encouraging new distributors to enter the market. Many drug4
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