engleski

UNOFFICIAL ECONOMY IN CROATIA AND THE IMPACT OF THE ECONOMIC RECESSION ON THE UNOFFICIAL ECONOMY

According to the Eurostat’s recommendations, GDP of each country must be as exhaustive as possible. Hence, all EU member states and candidate countries have a strict obligation to include the estimate of the unofficial economy (UE) in official GDP data. Over the past few years, the Central Bureau of Statistics of the Republic of Croatia (CBS) has been working on a project of improvement the exhaustiveness of national accounts. Recently, official national accounts data have been revised ; thus expanding coverage to include the estimated unofficial economy. This paper deals with the estimation of the UE in Croatia and its size over the observed period. The estimations are in line with Eurostat’s methodology. Results are presented by types of non-exhaustiveness and are comparable with other EU member states and candidate countries. The basic methodology used to estimate the size of UE is the Eurostat‘s Tabular Approach to Exhaustiveness. This approach provides a framework for the estimate of the UE that is particularly well suited for transition countries. According to this approach, different types of non-exhaustiveness have to be precisely defined and separated. All types of nonexhaustiveness are systematically covered and are mutually excluded. Main advantage of this method comes from the possibility of a comparison of different types of non-exhaustiveness adjustments by countries. This method is the most conservative, because the results are lower in comparison with other methods used to estimate the unofficial economy. The aim of the paper is to test the hypothesis that official and unofficial economy are substitutes – in period of economic growth, a share of unofficial economy is decreasing while UNOFFICIAL ECONOMY IN CROATIA AND THE IMPACT OF THE ECONOMIC RECESSION ON THE UNOFFICIAL ECONOMY 480 in downturn phase of economic cycle unofficial economy helps to reduce overall negative economic effects. Additionally, paper analyses trends in types of unofficial economy. While share of unreported labour is decreasing in upward phases of economic cycles, share of inaccurate reporting (under-reporting of income by firms and individuals) is increasing. On the other hand, in the recession period, there is evidence of rising impact of unreported labour. The paper points to the main factors behind unofficial economy growth during recessions.

Unofficial economy; Eurostat approach; Exhaustiveness of national accounts; ESA 1995; Croatia

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