What is shadow economy?

What is shadow economy?

What Is the Shadow Economy? Also called the underground, informal, or parallel economy, the shadow economy includes not only illegal activities but also unreported income from the production of legal goods and services, either from monetary or barter transactions.

What causes a shadow economy?

While the factors that generate and foster the growth of a shadow economy are many and complex, literature considers the following to be the most important: excessive tax burden, government over-regulation of business, and poor performance by government bodies (tax, judiciary, police, and other authorities).

What are the factors that have contributed to Nigeria’s economic growth?

Results indicate that the main determinants of economic growth in Nigeria are population growth, inflation, foreign direct investment (FDI), interest rates, exports as well as private & public investment.

Does Nigeria have a large economy?

The economy of Nigeria is a middle-income, mixed economy and emerging market, with expanding manufacturing, financial, service, communications, technology and entertainment sectors. It is ranked as the 27th-largest economy in the world in terms of nominal GDP, and the 24th-largest in terms of purchasing power parity.

Why is the shadow economy good?

The shadow (underground) economy plays a major role in many countries. On the one hand, this unregulated economic activity can result in reduced tax revenue and public goods and services, lower tax morale and less tax compliance, higher control costs, and lower economic growth rates.

Why is the shadow economy a challenge for the governments?

Shadow economies present a major problem for governments worldwide, particularly in developing countries. Economic activity that takes place in shadow economies is usually untaxed and unregulated, reducing governments’ fiscal revenues and eroding state power.

Is Nigeria Africa’s largest economy?

GDP of African countries 2021, by country Nigeria’s GDP amounted to 514 billion U.S. dollars in 2021 and records the highest gross domestic product in Africa. After South Africa, the third largest economy, two North African countries – Algeria and Morocco – followed in the list. African economies are growing fast.

What causes the most economic growth?

Broadly speaking, there are two main sources of economic growth: growth in the size of the workforce and growth in the productivity (output per hour worked) of that workforce. Either can increase the overall size of the economy but only strong productivity growth can increase per capita GDP and income.