Causes, consequences and possible ways for combating undeclared economy in Macedonia
Causes, consequences and possible ways for combating undeclared economy in Macedonia

Summary/Abstract: The “grey” economy has a serious impact on the micro and macroeconomic performance of the country. High levels of grey economy negatively affect the competitiveness of the formal firms due to unfair competition on the domestic market and regulatory burden. They also deter foreign direct investments, which contributes to lower capital inflows and productivity in the country. This paper attempts to locate causes, consequences, scope and to estimate the level of grey economy in the Republic of Macedonia, as well as possible ways for combating grey economy in Republic of Macedonia and understand the basic characteristics of the Macedonian case in order to present well‐grounded policy recommendations.The main finding (conclusion) of the paper is the fact that the grey economy in The Republic of Macedonia is a multifaceted phenomenon and the most efficient manner to remove the causes for the occurrence and presence of the grey economy is the improvement of the institutional frame in the country. There is a need for directly focused Government measures that would precipitate the integration of the grey economy in the formal sector, once the right conditions are put in place. The recommendations that this paper promotes will head exactly in that direction.

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