The Informal Economy: Contrasting Fiscal Policies and Legal Vacuum Issues in the Context of Albania's Tourism Sector

Abstract

The informal economy sparks ongoing debates among economists and researchers, shedding light on its costs, benefits, and measurement challenges. In the context of Albania, this informal sector significantly impacts the country's gross domestic product, viewed by some as a facilitator of social welfare. However, in the current economic climate, the informal economy is seen as a hindrance to market competition crucial for Albania's economic development. This paper explores whether state policies and strategies aimed at economic growth effectively reduce unemployment and ensure income distribution, or if they inadvertently perpetuate informality. Focusing on the tourism sector, we examine how informality hampers the attainment of necessary standards in domestic tourism. Specifically, we highlight disparities in lodging taxes between Albania and other regions, posing challenges in cost estimation and potentially amounting to millions of euros lost in this sector alone.