Shadow Economy 02/04/2012
1. Action Plan to Reduce Shadow Economy
The credit crunch at the end of 2007 left a significant influence in the global markets, Latvia among other countries also suffered from reversed GDP growth trend from 10,0% in 2007 to -4,2% in 2008 reaching a bottom end of -18,0% in 2009.
Furthermore, as a result of decline in tax revenue government faced an urgent need to cut the public expenditure and reorganize the administration in order to meet the challenge of new economic conditions. A fiscal help from EU and IMF is an essential assistance to ensure successful implementation of the structural reforms.
Recognizing the urgent need to revitalize the economy, as a part of structural reforms Government of Latvia is addressing the issue of reducing shadow economy. On 27th May 2010 The Cabinet of Ministers accepted “Shadow Economy Reduction Plan” followed by a high level working party to develop “Action Plan to Reduce Shadow Economy and Promote Fair Competition 2010-2013” with overarching activity pool to simultaneously address and encourage the shift of unregistered economic activities into legal sector.
For overall insight please see the presentation.
>2. Conference "Shadow Economy and Economic Crisis"
Ministry of Finance in 1st October 2010 had the honor of hosting the conference „Shadow Economy and Economic Crisis” to review methods and results for estimating the size of shadow economy, its causes, promoting and eliminating factors. The Action Plan to Reduce Shadow Economy and Promote Fair Competition 2010-2013” was presented for the public discussion.
Prime Minister Valdis Dombrovskis, in the conference opening stressed the potential of shadow economy in budget consolidation and invited academics, entrepreneurs, social partners and press commentators to actively participate in the discussions to develop common understanding and proposals for further action and cooperation.
Leading world experts in shadow economy DDr.h.c. Friedrich Schneider un Dr. Andreas Buehn took active role in promoting discussions, also colleagues from Lithuania and Estonia were present.
Please see the revised calculation for Shadow Economy estimates by Dr.F.Schneider "Size and Development of the Shadow Economy of 31 European Countries from 2003 to 2010 (Revised Version)" and F.Schneider, A.Buehn and C.E. Montenegro "Shadow Economies All over the World: New Estimates for 162 Countries from 1999 to 2007, (Revised Version)".
Annex: Conference agenda
1. Dr. A.Buehn, Dr. F.Schneider - Shadow Economies in Latvia and other European Countries: What do we (not)know?
2. Dr. A.Sauka, Stockholm School of Economics – Shadow Economy in Latvia.
3. D.Tomase, Central Statistic Bureau – Shadow Economy evaluation methods and appraisal in Latvia (in latvian).
4. M.Cakste, Ministry of Finance - The Action Plan to Reduce Shadow Economy and Promote Fair Competition 2010-2013.
5. S.Jegere, SIA ”Baltic Consultancy”- The evaluation of the Action Plan to Reduce Shadow Economy and Promote Fair Competition 2010-2013.
6. J.Butkevics, Latvian Chamber of Commerce and Industry - Shadow Economy from Entrepreneurs point of view: Causes and Solutions.
7. A.Jakobsons, Employers’ Confederation of Latvia - Shadow Economy impact on Entrepreneurship in Latvia.