The shadow economy in Georgia constitutes 13.6% of the overall economy, according to economist Soso Archvadze, who spoke with radio station "Commersant." He attributes the emergence of the shadow economy to several factors, including bureaucratic challenges and a low tax culture in the country.
"The reasons for the shadow economy are manifold. Firstly, it remains unregistered in official statistics; its producers evade taxation, frequently breach regulations, and, most importantly, the lack of social protection. In addition, the taxes are high, individuals and entities do not want to pay taxes, there is a certain bureaucracy and registration difficulties. It should not be excluded that not only in the realities of Georgia, but also in general there is a lack of trust in state institutions, and when the labor market supply exceeds demand, people agree to much lower wages just to receive salaries, - it also affects the existence of the shadow economy», says Archvadze.
The economist suggests that the ptobability of a complete disappearance of the shadow economy or decline to zero is low. However, through social education and entrepreneur support, its share in the economy can be significantly reduced.
"There isn't a one-size-fits-all solution, but several key aspects exist. Primarily, social education is crucial, along with imparting specific knowledge to the community and improving education. Additionally, economic factors play a role: supporting entrepreneurs, easing access to financing, providing state legal advice, simplificatoion of registration, enhancing public service quality, and further simplifying and lowering taxes, particularly for small businesses."
There is no guarantee that the shadow economy will be eradicated entirely. It holds a certain niche even in the economies of developed nations, including the United States, where the shadow economy fluctuates within 1.5-2.5 trillion dollars," economist Soso Archvadze points out.
