REASONS FOR THE FORMATION OF THE SHADOW ECONOMY OF UKRAINE

Abstract

The shadow economy has been an integral part of society since the beginning of economic relations. With each stage of society’s development, it becomes an increasing problem and has more and more destructive consequences. Shadow processes pose a significant threat to the national economy of Ukraine. Besides, this problem is a marker of unresolved issues in the marketplace and its governance structure, as each question has its cause. That is why addressing the shadow economy is such an essential step in improving the country’s economic situation in difficult times of crisis. It is clear that the complete overcoming of shadowing processes is a perfect idea, but still, control over this phenomenon must be of high quality. The primary purpose of the study is to highlight the main factors of shadowing for the active form of tools to combat the shadow economy. During the review of the material, a causal relationship was structured and identified by the topic, and a method for normalizing the shadow economy was developed. It has been found that the shadow economy is the result, a specific socio-economic response to incorrect economic policies. It is also established that the tax burden is one of the leading factors in the transition of part of the company’s activities into the shadows. Improper distribution of the tax burden significantly reduces the competitiveness of small and medium-sized businesses in the goods and services market. It is also concluded that the shadow economy is a particular shock absorber of social inequality, namely the large gap between the poor and the wealthy. Hence, the shadow economy provides lower-priced goods that are more affordable for the poor. It has also been found that corruption also plays a massive role in this issue. It provokes the shadow economy as an effect on social and legal inequality and often the inability of the enterprise to survive without ties to the administrative apparatus. The shadow economy is a reaction to imperfect antitrust policies, where small businesses are less competitive and often cannot enter the market at all. Methods for stabilizing the level of the country’s shadow economy have also been developed and proposed.