Economic: the shadow economy .. Its causes and its consequences and ways of dealing

Economic: the shadow economy .. Its causes and its consequences and ways of dealing
(This Article Headlined 20/10/09)
D. Bakr Ibrahim Mahmoud
Talking about the shadow economy (shadow economy) is of great significance, particularly after the recent transfers and variables that hit upon the political, economic and social rights, and after taking the position occupied at the level of social, political and economic thought.
It is intended Uma-called shadow economy, hidden economy or the informal economy is all economic activities practiced by individuals or organizations, but are not counted in official government does not know the actual value does not fall in national income accounts are not subject to the tax system or the fees and the system of administrative and organizational structure. The main activities economic intervention under the name of the shadow economy following:
1- legitimate activities not prohibited, but is being practiced without a license may be the desire of owners to avoid the complexities of administrative or otherwise. Consequently, the resulting interference can not be expressed formally incorporated into the national income.
2- and illegal activities as smuggling of prohibited drugs and money laundering and trade in stolen goods and contraband, embezzlement, and all forms of financial corruption that lead to earn money illegally. And activates the shadow economy in the countries that suffer from economic instability and inadequate and non-law enforcement. We have conducted studies showed Monetary Fund world that increasingly Madlanh shadow economy in developing countries and Eastern countries in particular, where the rate in developing countries ranges between 35 - 44% of GDP in the eastern countries ranges between 21 - 30% in the States of the Organization of Economic Cooperation and Development estimated that between 14 - 16%.
It may be hidden economic activity is a healthy phenomenon if the project activity as the production factor in the hidden economy may be higher than is sometimes apparent in the economy, given the high incentives of hidden work and adaptability to work with the working conditions and satisfaction with, and may be appropriate to the economic conditions of developing countries. But There is no room for doubt, the hidden economic activity is a negative phenomenon if such activities are prohibited and illegal where it hurts the public interest and the national economy as well as the actual result to the increasing incidence of tax evasion from payment of fees and fines, which the government is losing significant revenues adversely affect the overall budget and the level of public expenditure then on the level of economic development in general.
This can lead governments to pursue economic policies more complicated, such as increasing taxes, fees and fines and complexity of administrative and regulatory procedures, security, judicial and increase recurrent public expenditure at the expense of investment spending at the expense of spending on the political structure without a logical justification.
The higher the rate of the shadow economy at the expense of the real economy more apparent given the information and statistics are misleading and inaccurate for the real economic potential of society and led to the misallocation of economic resources and poor distribution of GDP. As well as the shadow economy affect large communities of moral and social development which is supposed to support the interaction between all its members on the religious faith and moral sense comes from the conscience of individuals and self-censorship. If you look at our economy, we see that the Iraqi economic and social conditions suffered by the Iraqi economy produced appropriate environment and foster the growth of the shadow economy became the implications of this economy is clearly visible on the Iraqi economy. To counter the negative effects resulting from the shadow economy and to protect our Iraqi spread of this phenomenon is not necessary to do the following:
1- Develop a strategy appropriate to address the issues of the shadow economy through mechanisms for implementation and follow-up actors and approval of the rules governing market mechanisms.
2- To encourage small and medium-sized enterprises by providing loans and facilities provided for the registration of their trade unions and government agencies concerned.
3- Raising awareness and consolidation of the concepts of scientific culture among workers in the shadow economy to show the advantages of the regulatory process to engage trade unions and government institutions.
4- Development of methods of rehabilitation and training to meet the requirements of the labor market.
5- Dealing with commercial and industrial complexes, which is an incubator for initiatives and projects that are scattered geographically far from the eyes of the State and the provision of investment incentives.
6- Activating the legal role of the state through the formulation of labor law and social security incentives and to stimulate the informal sector to join in the formal sector.
7- Development of Agriculture, and the adoption of agricultural development projects through the implementation of agricultural projects in rural areas to benefit from the operation of local employment and create new jobs to reduce unemployment and migration from the countryside to the city.
8- Restructuring of the labor market to accommodate the increase in the national labor force, through the adoption of different programs meant to train personnel and rehabilitation to enable them to obtain employment opportunities.
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