Author(s):
1. Silvestru Catalin Ionut,

Abstract:
The current crisis has revealed serious problems of European economies. In the context of economic recession, there has been a sharp decline of public financial resources, which led to a significant increase in consolidated national government budget deficits. High corruption and shadow economy / underground economy share in GDP are two other factors that worsen the economic situation of many European countries. In this framework, we aim to develop statistical and econometric analysis in order to capture the main aspects of the underground economy, corruption, quality of public finances, human development index and economic growth, in the context of the European Union. We use the real gross domestic product growth rate, gross domestic product growth per head of population to commensurate economic growth process. For the quality of the public sector we use governance indicators (voice and accountability, political stability, government effectiveness, regulatory quality, rule of law, control of corruption). The qualitative variables regarding shadow economy, corruption and human quality of life are surprised by underground economy as percentage in GDP, corruption perception index and human development index. The analysis is conducted on panel data from EU27 countries in general, highlighting aspects related to Romania, with data from 2003 - 2010. We test the correlation between the underground economy and the corruption perception index, the fiscal balance, the economic growth, the human development index and the quality of public sector. Thus, we analyze whether underground economy is negatively or positively influenced by corruption perception index, by public balance, by economic development, measured by gross domestic product per capita, by the governance indicators – regulatory quality, voice and accountability, control of corruption and by the human development index. As result of the analysis, we expect that in addition to the reduction of underground economy by increasing efforts to mobilize tax revenues, the improvement of public governance and other qualitative indicators have to be considered, as these have an important effect on the efficiency of the applied methods.

Key words:
Underground economy, Corruption, Public Sector, Economic Growth, Human development

Thematic field:
Government and economic development

Date of abstract submission:
01.06.2012.

Number of visits:
514

Conference:
REDETE 2012