The informal economy

This case portrays the widely propagated and accepted phenomena of bribes and corruption in developing countries. Specifically how it affects every sector of the Ukrainian society, therefore making it difficult for the American investors to establish companies there and to prosper solely on doing good business. The case describes the types of obstacles and ethical dilemmas being created for the investors as a result of bribery and extortion.

Large corporations such as Nike, Gap, and Reebok and many others from the United States have moved their factories to undeveloped nations; barely pay their employees enough to live on. Countries such as China, Indonesia, and Haiti have readily abundant cheap labor. There should be labor laws or an obligation of respecting workers to provide decent working conditions, fair wages, and safety standards.

In a hot, dark warehouse, hundreds of women sit, hours on end, working at rickety old sewing machines. No one talks, the only noise that can be heard is the buzz of the machinery. Occasionally, there will be a cry of pain followed by a sharp “get back to work”. Sitting at one machine is a single mother working to send her kids to school. Her hands bleed and her back aches, but the fear of the alternative is worse than that of her reality. She has been at the machine for 8 hours now without a break so that she can meet the strict quotas that determine her pay. The smell of formaldehyde plagues the air, clinging to her clothes making her short of breath. This is where she will be stuck for years, decades even, working to pay off her debt and

While the underground economy might benefit individuals involved in the trades and make some part of the society happy, it is creating a bad cycle that brings negative third-party effects on Canada and should be eliminated as much as possible. Underground economy, also known as the black market, is when sellers and buyers trade their goods and services then on purposely unreported the business activity to evade the price controls. That includes avoiding the price ceilings, the price floors and tax rates set by the Government. The black market is the second largest type of market in the world, occurring in both developed and developing countries. All kinds of goods and services are available in an underground economy. The most commonly traded are goods and services that are available in the official market, but at a lower cost in the black market, or goods and services that have a limited supply in the official market, but are sold at an elevated price in the black market. Despite the trade being illegal, as long as both the seller and buyer comes to an agreement on the price, they trade privately with cash to avoid being detected. Although many sellers get away with this, at the end of the day underground economy is a continued cycle of affecting the country and its citizens, including sellers and buyers in the black market, mostly its tax revenues will be affected, then the GDP, and finally its citizens. All black market trades are done in the shadows, but if the root

This paper looks into the different types of underground economies and its effects on Canada, and argues that underground economy is destructive to the society and should be eliminated as much as possible. With evidence from Statistics Canada, it shows the percentage of how much the black market is affecting the GDP. It also discusses the main causes as to why some sellers choose to be in the underground economy and how they could benefit from it temporarily. Underground economies in a long run are invisible actions that creates very visible consequences, including the vicious cycle of low tax revenue, less quality and quantity in public goods, discourage in money circulation, drawbacks to GDP, lowered employment rate and a society that

The Structural Adjustment Policy (SAPs), when policies required economic reorganization toward less government involvement in industry, agriculture, and social services is a big topic in globalization in Middle and South America (Pulsipher & Pulsipher 2012). The people rebelled on this attempt to globalization by electing governments, and now SAPs has been joined by growth in regional free trade agreement with North American Free Trade and Mesocour to reduce tariffs and other barriers among neighboring and other countries (Pulsipher & Pulsipher 2012). Throughout the region nearly everyone depends on the informal economy as a buyer or seller. Hopefully the new economy may help. (Pulsipher & Pulsipher 2012). Other examples of globalization is the role of remittances in this region among the countries and sometimes farther away (Pulsipher & Pulsipher

In my opinion every country is corrupt and has pliantly of bribery in their governments, businesses, and even households. Bribery in its most basic form is the practice of giving gifts of monetary value to a client or potential customer to persuade their decision. According to Black Law’s Dictionary, bribery is “The offering, giving, receiving, or soliciting of any item of value to influence the actions of an official or other person in charge of a public or legal duty.” This practice constitutes a crime in most developed countries and is highly controversial. As with any controversy, bribery has its advantages as well as problems. Common advantages of bribery include gaining business without needing to have superior quality or services, building

1. Describe the economic and social impact of bribes and other similar payments in emerging economics.

On the flip side, Gunter argues that Iraq enjoys a glowing and vibrant "underground economy" that is a direct side effect of its bureaucracy and corruption. Private businesses in Iraq must choose between seeking to become a legal enterprise, which due to regulatory hostility is a difficult and expensive process, or operating in the underground economy with all of the associated inefficiencies. One characteristic common to both options is the necessity of paying bribes to a long line of corrupt officials. One survey of corruption in Iraq showed that one-fifth of private businesses reported paying 40% or more of their firm’s total revenues in bribes. Excluding agriculture, an estimated 6% of the labor force is employed by private legal enterprises while 20% is employed in the underground economy. Firms in the underground economy tend to be small-scale, engaged in services or light manufacturing. In many cases, underground entities are engaged in illegal activities such as selling black market fuel or smuggling across Iraq’s long open borders. However, other underground firms are engaged in other wise legal activities that are concealed to avoid the choice of meeting arduous regulations or paying bribes to inspectors to ignore violations. As expected, workers in the underground economy lack legal protections and there are stories of workers being denied pay or even physically abused. Generally firms in Iraq’s underground economy are very inefficient. This inefficiency arises

It would be convenient to start this research paper by stating that corruption is a challenge mainly for businesses in developing countries and that it is unrelated to the current affliction of the economy in the United States. It would also be convenient to claim corruption has declined in America as a result of awareness raising campaigns and the numerous anti-corruption laws. But none of those aforementioned statements would be true. Corruption is not the exception, but rather the rule in today’s business practices. In 2004, Daniel Kaufmann, a senior fellow at Brookings Institution and former director at the World Bank, calculated an index of "legally corrupt" manifestations which is defined as the extent of undue influence

There are also economic effects that result from government corruption. These economic effects coincided with bribery. People who work for companies that are at risk of being shut down for health or other reasons will pay any amount to make their problems go away. In Mexico, food store owners such as Jose Luis Garcia will pay anywhere from $50-$100 to have inspectors turn the other way (Archibold). This happens on a small scale such as

Corruption can be defined as the use of entrusted power to accumulate public wealthy for personal benefit. Corruption is not peculiar to any country, continent or state; it is sure a global issue which is an endemic to all government all over the world. However, corruption is prevalent in the Niger delta region of Nigeria; public officers in this oil producing state of Nigeria are corrupt. Consequently, it has defied the Niger delta from developing politically and economically which has left the states reputation in a mess. Radicalization of youths, abject poverty and -political instability are the three leading effects of corruption in the Niger delta region of Nigeria.

Political corruption is parasitic; it finds a host, and can almost always find a way to survive. Eventually, people grow dependent on this corruption as a means for income, thus forming a symbiosis between the people who benefit from it, and the elites that regulate it. People sometimes ignore the corruption surrounding them, feeling that as long as the politicians do their jobs well, their ‘extra salary’ can’t hurt (BNS).

Corruption is a complex political, social, and economic anomaly that negatively affects developing and developed countries. It weakens democratic institutions, holds economic development, widening the rich-poor gap and certainly leads to governmental instability. The World Bank definition of corruption states that “…the abuse of public office for private gain”.

Formal and informal institutions’ lending policies and access to credit by small-scale enterprises in Kenya: An empirical assessment