Underground Economy Accounting Research

This thesis is basically concerned with Underground Economy, an area that remains to be fully understood but has attached increasing attention. It has many other names, such as Black Economy, Irregular Economy, Shadow Economy and Hidden Economy. Underground Economy is so omnipresent in our economic life that smuggling, prostitution, unlicensed business, unregistered employment and tax gap are all parts of it. And all these activities are trying to escape government regulation by every possible means. As a result, Underground Economy is beyond the supervision of current official statistics. Obviously it is hard for us to measure the products of Underground Economy in national accounts.Early in 1970's, both governments and economists of main western countries had paid a great deal of attention to the study of Underground Economy. And by now they have achieved a lot in the measurement of Underground Economy. In China, however, neither government nor academic circles have attached much importance to this field.In fact, quantitative research on the measurement of Underground Economy is of both theoretical and practical significance in China. Formerly, influenced by the SNA of 1968 publicized by the United Nations, Chinese government removed the Underground Economy from the production accounting. Consequently this destroyed the balance of national accounts. The United States' SNA of 1993 called on that every country should estimate the gross products of Underground Economy in national accounts as possible as she can. Since 1980, Chinese Underground Economy has greatly expanded and has damaged almost every aspect of our life in varying degrees. For the good of resources allocation efficiency and economic development, we should strengthen the study of the measurement of Underground Economy, analyze its originalities and see through its manifestations to grasping the mechanism of its existence and development. Only after we have done these can we profoundly understand the development of economy, adopt feasible countermeasures to Underground Economy and then advance our socialist market economy. Directed by material dialectics, this thesis applies scientific abstraction and current economic theories together with positive and normative analysis to the study of the measurement of Underground Economy. As a special economic field, Underground Economy has not been comprehensively understood and the study of it is still tentative. First of all, the thesis makes an overall evaluation on the traditional definition, and then advances a new and relatively more accurate definition of Underground Economy. From the income point of view, Underground Economy is divided into two parts: unreported economy and criminal economy. Second, the thesis carefully investigates Underground Economy's manifestations and sums up Underground Economy's most important characteristics. The thesis methodically analyzes the breeding grounds for Underground Economy. Undoubtedly, tax rate, profit margin, inflation rate and other factors affect Underground Economy. But the essential prerequisite is that Underground Economy is able to exist. The thesis demonstrates that it is the deficiency of our current institution that accounts for the Underground Economy's occurrence. Underground Economy has damaged our life greatly. It distorts the national economic information system and makes macro-economic management more difficult. And also, it destroys the fair challenge principle, disturbs efficient-resource allocation and reduces financial revenue. Last but never the least, Underground Economy ruins the general mood of society and seriously harms the socialist cultural construction. But we can not neglect the fact that in some degree Underground Economy has few initiatives. In a sense, Underground Economy is an alarm for Exposed Economy. Research on the measurement of Underground Economy is the focus of this thesis. Based on summing-up of the achievements made in research on Underground Economy abroad, the thesis...