2 thoughts on “Informal Economy (World Economics)”

1. shinichi Post author13/01/2023 at 5:29 am

   Informal Economy

   World Economics

   https://www.worldeconomics.com/Concepts/InformalEconomy/

   An informal economy (or shadow economy) is the part of any economy that is neither taxed nor monitored by any form of government.

   The Informal sector makes up a larger share of poorer, more agricultural and less developed economies.

   Why Measure the Informal Economy?

   In many poorer countries as found in the Frontier Markets, a very large swathe of activity can remain uncounted and hence outside national accounts. Due to the nature of much informal work, ranging from housework, farming through to gambling, prostitution, drug dealing, and smuggling, calculations of the value of such activities are difficult.

   Methodologies

   There have been many attempts to estimate the size of parts of the informal economy using both direct and indirect approaches, Leandro Medina and Friedrich Schneider describe these in their 2018 IMF Working Paper as:

   Direct approaches:

   1. Measurement by the System of National Accounts Statistics – Discrepancy method;
   2. Survey technique approach
   3. The use of surveys of company managers; and
   4. The estimation of the consumption-income-gap of households

   In-direct approaches:

   1. Discrepancy between national expenditure and income statistics
   2. Discrepancy between official and actual labour force
   3. Electricity approach
   4. Transaction approach
   5. Currency demand approach (CDA)
   6. Multiple Indicators, Multiple Causes (MIMIC) approach

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2. shinichi Post author13/01/2023 at 5:29 am

   China’s Informal Economy Size

   INFORMAL ECONOMY SIZE AS A PERCENTAGE OF GDP (%)

   World Economics

   https://www.worldeconomics.com/Informal-Economy/China.aspx

   An informal economy (informal sector or shadow economy) is the part of any economy that is neither officially taxed nor monitored. Read more about the World Economics Informal Economy database

   The size of China’s informal economy is estimated to be 12.7% which represents approximately $3,160 billion at GDP PPP levels.

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