This type of economy plays a major role in many countries. People evade taxes and regulations by working or by employing people illegally. 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. But on the other hand, this type of economy can be a powerful force for advancing institutional change and can boost the overall production of goods and services in the economy. What economy can be described like this?

Другие предметы Университет Теневая экономика английский язык профессиональная деятельность университет изучение языка навыки общения международные отношения карьерные возможности деловая коммуникация языковая практика профессиональные компетенции Новый

The type of economy you are describing is known as the "informal economy" or "shadow economy." This sector includes all economic activities that are not regulated by the government and are not included in the official statistics.

To understand this better, let's break down the characteristics and implications of the informal economy:

Characteristics of the Informal Economy:

• Unregulated: Activities are not monitored by government authorities.
• Tax Evasion: Individuals and businesses often do not pay taxes on their earnings.
• Employment Practices: Workers may be employed without formal contracts, leading to job insecurity.
• Variety of Activities: It includes street vending, unregistered businesses, and freelance work.

Implications of the Informal Economy:

1. Reduced Tax Revenue: Since these activities are not taxed, governments lose significant income, which can affect public services.
2. Lower Tax Morale: When people see others evading taxes, it can lead to a general decline in tax compliance among the population.
3. Higher Control Costs: Governments may need to spend more on enforcement to regulate or curb informal activities.
4. Economic Growth: While the informal economy can contribute to production, it may not be sustainable and can lead to lower overall economic growth in the long run.
5. Institutional Change: In some cases, the informal economy can drive demand for regulatory reforms and better governance.

In conclusion, while the informal economy can have negative effects on taxation and regulation, it also plays a complex role in the overall economic landscape, potentially fostering innovation and adaptation in response to regulatory environments.