Investigating the Relationship between Governance Indicators and Shadow Economy in Iran

Subject Areas : علوم سیاسی

Mahdi  Mansouri Bidkani ¹ (PhD Student in Economics, Department of Economics, Islamic Azad University, Central Tehran Branch)
عباس علی  ابونوری ² (دانشیار گروه اقتصاد، دانشکده اقتصاد و حسابداری، دانشگاه آزاد اسلامی، واحد تهران مرکزی)
Ahmad  Tavakoli ³ (Faculty member of the Department of Economics, Shahid Beheshti University, Tehran, Iran)
Marjan  Daman keshideh ⁴ (Assistant Professor of Economics, Faculty of Economics and Accounting, Islamic Azad University, Central Tehran Branch, Tehran, Iran)

Received: 2022-05-25 Accepted : 2022-08-20 Published : 2022-08-30

Keywords: Iran, Governance, Shadow Economy, Corruption Control, Government Efficiency,

Abstract :

The shadow economy (SE) is a pathological normalcy, not only in developing countries but also in developed ones, causing disagreeable distortions in the real economy. The causes of the shadow economy can be traced back to actors who operate outside the formal sector to reap the benefits. The way these actors work can both affect the quality of governance and affect it. The right to comment and accountability, political stability and non-violence, government efficiency, the quality of governance laws, the rule of law and the control of corruption are indicators of governance evaluation in this regard. Therefore, in this study, using Hishao causality method, the causal relationship between these indicators with the shadow economy in Iran during the years 1995 to 2017 has been investigated. Findings show that government efficiency, rule of law and control of corruption have a two-way relationship with the shadow economy and the indicators of the right to comment and accountability, political stability and non-violence and the quality of governance laws have a one-way relationship with it.