Relationship between shadow and green economy: less shadow more green

Abstract

Main aim of this work is to determine the relative efficiency of the hidden (shadow) economy (r) with respect to the regular economy. National economies of different size and level of development have been studied (Macedonia, Albania, Croatia, Bosnia and Herzegovina, Israel, Czech Republic, Hungary, Switzerland and United States). Sophisticated energy consumption method was used in calculations. It is found that the ratio r for different economies varies in a large range from 0.14 to 0.70, covering almost the entire interval of theoretically expected values (from 0 to 1). Therefore, world economies differ substantially not only by the size of the hidden economy, but also by the efficiency of the use of energy resources in it. It is expected that the measures leading to the reduction of hidden economy will also provide significant increase of the efficient use of energy and expectedly various other resources. Interventions in the sector of the hidden economy aiming at greener production of energy appear to be particularly important for the ongoing transition to green economy, since it consumes a large part of the total energy due to the low energy efficiency in this sector. In conclusion, in creating policies aimed to cope with the hidden economy, both aspects—the size and the energy efficiency are to be taken into account.