Assessment Of The Underground Economy In Transition And Governance

The term "underground economy" is used to refer to those activities which hide from government' s monitor. Nowdays, the underground economy has already became an important and latent power, which has profound impacts on almost all aspects of the society. The facts force us to develop a more proper theory to solve, however, the experts and government do not pay enough attention to this phenomenon partly because of its complex and hidden characters. The research level on this issue can' t satisfy the requirement of guiding the process of economic transition. Under such circumstances, the research of underground economy plays significance role not only in enhancing academic level of this field,but also in the real sustainable development of economy.For the above reasons, this paper at first reviewed and summarized major research results in this field. Based on this, the author did comprehensive investigation of the underground economy, including its formation mechanism, its actual size, characters of its regional distribution and real impact on real economy etc. The thesis took the first steps in constructing an integrated framework of the underground economy research.Firstly, this paper discussed the formation mechanism from general causes to specific ones and got a series of conclusions: (1) The tax burdern, institutional vacuity, globalization and corruption are general causes which induce underground economy. (2) The dual-track of price, reform of state-owned enterprises, organization structure, the unofficial employement, and real estate market are specific causes for china. In addition, this paper explored the theoretical foundation in the research of underground economy research also and pointed out that our short term goal is aiming at finding the explanation power of theoretical tools from different school about this phenomenon, so that we can lay the foundation of better developed underground economy theory.Secondly, this article estimated the real size of underground economy in china during the past 30 years by using general currency model, income-expenditure model, physical input model and multiple indicators multiple casuses(MIMIC) model. By applyng the above models, the author emphasized the hypothesis and limitation of those models, and then tried to modify them to improve the explanation power of models.Thirdly, the thesis all-sidedly investigated the dual impacts of underground economy on economic and social developemt of china. The author find out that underground economy will exert adversely effects on policymaking, social structure, market system, economic security and social welfare. Meanwhile, this study also tentatively discussed some positive influences, and this can help us understanding the characters of underground economy more deeply.Besides, this paper made an effort to study of the regional distribution in china. The coordination of regional economy is a crucial problem for a big country like china; This paper tried to cover gaps in the ignorance of underground economy in regional study. The international comparative analysis to the underground economy provided opportunities to enhance our understanding about its complexity and constructive experiences about its regulation.Finally, basing on all the above researches, this article tried to build a new integrated theoretical framework to resolve the regulation puzzle of underground economy and conduct new thoughts for the field of underground economy research.