Black market clouds ex-communist Europe.
AFP. 20 April 2002. Black market clouds ex-communist Europe.
SOFIA -- Black market or "shadow" economies are booming in ex-communist Europe, where they represent over a third of GDP on average, amid lax and corrupt bureaucratic and legal systems, according to experts.
More than a decade after the collapse of communism, and with much of the region preparing to join the European Union, poor workers and children are notably forced to earn their living outside legal economic systems.
And politicians in some ex-communist states all too often turn a blind eye to the parallel economy, notably because it reduces pressure on them to find legal solutions to poverty.
"The principal beneficiaries are politicians and bureaucracy," said Tatiana Nenova, a World Bank expert at a conference in the Bulgarian capital Sofia on the shadow economy in transition countries.
"The informal sector reduces the need from poverty-combatting programs," she said, while lamenting that: "People in the informal economy are the first to be hit by worsening economy conditions."
According to a study presented to the conference, the shadow economy represents on average 38 percent of GDP in 22 ex-Soviet and Balkan countries, compared to an average of 16.7 percent in OECD countries.
The record is held by Georgia, where the shadow economy represents 53.2 percent of the country's GDP.
At the other end of the spectrum, leading EU candidate the Czech Republic only makes 12.6 percent of its GDP on the black.
In comparison, within the OECD countries, Italy has the biggest shadow economy in relative terms, with 27 percent of GDP, while the smallest is Switzerland where only 8.6 percent of GDP is generated illegally.
A worrying trend is that children as young as five are drawn into the parallel economy, said Bulgarian sociologist Tania Chavdarova, adding that 6.5 percent of 5-17 year-olds work up to 13 hours a day for pittance wages.