THE IMPACT OF INTERNATIONAL COMPETITIVENESS ON THE SHADOWIZATION OF THE WORLD ECONOMY

Abstract

The article is devoted to the study of the influence of international competitiveness on the shadowing of the world economy and in the cross-section of groups of countries with different levels of income per capita. A theoretical analysis of the latest publications on the application of the methodology of quantitative and qualitative assessment of the mutual influence of international competitiveness and the shadowing of the world economy was carried out. The results of the correlation-regression analysis confirmed the following hypotheses: 1) regarding the existence of an inverse relationship between the shadow economy and international competitiveness at the global level (noticeable inverse correlation -0.689); 2) regarding the difference in the density and nature of the connection between the shadow economy and international competitiveness between groups of countries with different levels of per capita income. Thus, high-income countries have a high inverse correlation (-0.714), and low-income countries have a moderate inverse correlation (-0.477). The correlation between the shadow economy and international competitiveness in upper-middle-income and low-income country groups is not confirmed. The example of a single upper-middle-income country (China) shows that there is a very high inverse correlation (almost deterministic dependence). Econometric modeling showed that if the index of global competitiveness in countries with high per capita income increases by 1 point, the specific weight of the shadow economy of these countries will decrease by almost 1% of GDP. It is well-founded that directing economic policy to increase international competitiveness in high-income and lower-income countries will not only improve welfare and international competitive position but also reduce the shadowing of their economies. In upper-middle-income and low-income countries, it is necessary to look for other determinants of the impact of the shadow economy and to analyze more deeply both the manifestations of shadow activities and the institutional gaps that caused them. The use of global coordination mechanisms in countries with different levels of development to improve global competitiveness index scores across the main pillars will contribute to the formation of a global institutional architecture aimed at reducing the shadowing of the global economy. Keywords: shadow economy, shadow economy of the world economy, international competitiveness, global competitiveness index, grouping of countries.