UNDERGROUND ECONOMY – FAVORING FACTORS. THE STUDY OF THE PHENOMENON IN A EUROPEAN CONTEXT

Abstract

Continuing the study on the line of deepening the factors that favor and enhance the underground economy, we propose an analysis of how it manifests itself at national level, related to the European context, aiming to find effective solutions to reduce and keep the informal economy within reasonably accepted limits, there can be no question of its complete eradication. The existence of the underground economy level that cannot produce decisive negative effects in the economy, respectively serious market distortions and competitive environment, can be a pressure factor on the bureaucratic-legislative system in order to optimize it, respectively on the need to increase the economy digitalization level. The underground economy is directly related to the policies of a state, respectively responsible for the state budget size as a result of monetary contributions from individuals and legal entities. The underground economy is a complex phenomenon and can differ from one state to another, with certain features shaped by the fiscal policy adopted by each state. Regarding the differences in fiscal policy between states, the study highlights certain specific features of the states in the European economy, generated mainly by the level of development of their economy. In Europe’s developed economies, fiscal policy is geared towards achieving a high level of employment, while developing economies focus on creating an conducive environment to economic development. The use of the methodology for investigating the literature, followed by the analysis and synthesis of data allowed us to identify the interdependencies between the factors favoring the underground economy, respectively the impact it had on the national economy as a whole and related to the European environment.