The informal economy interestingly can be known as the black economy, shadow economy, informal sector or gray economy due to its diverse activities and driven motives . Scholars argue that the informal economy is hard to measure because of the difficulty in defining the activities. Layman’s term the informal economy is the set of activities purposely done to escape from government reach or regulations, and this includes criminal activities. Ukranian Ministry of Economy, define the informal economy includes activities such as illegal production, undeclared activities for the purpose of tax evasion and an involvement of family or social connections in regular activities . Nothing much different from another definition, but there …show more content…
The people of Ukraine well understand that whenever the oligarchs appointed in a critical job especially in the government or prominent sectors, it will not create a healthy environment. This will create additional illegal activities which creating uncontrol crime and population stratification.
Population Stratification
According to Vinnychuk and Ziukov in their study on “Shadow Economy in Ukraine: Modelling and Analysis” , they have identified socio-economic implications from the functioning of the informal economy . Based on the current situation in Ukraine, the need for survival of its population in the rough economic crisis has created a lot of informal activities. In addition, the culture of blat or using informal connections for the personal benefit has created stratification to the population.
“In the social sphere, shadow economy has led to a sharp differentiation, stratification of society into the rich and poor, to orientation large part of society, including middle class, on generating income by any means” .
This will create an enormous impact on the population and probably subdivided into pro-Western and pro-Russia. Therefore, Ukraine will be trapped with an economic system that unable to choose between the free-market and post-Soviet worlds …show more content…
Although there is an improvement and measures taken to mitigate the problems, Ukraine still requires support from outside. It can be done better if Ukraine is having a undivided support from other friendly nations. As mentioned earlier, since the agression from Rusia, Ukraine has received tremendously economic assistance from friendly nations. Therefore, good relationships and trust is the key factor in bulding or to restructure her economy. If Ukraine is unable to control her informal economy, the growth of economic crime will increase and this will definetly will turn away any international partners. Thus it will destruct their business relationships and opportunity to economic