The underground economy in Romania

Abstract

The paper aims at covering issues related to the underground economy, activities that compound this phenomenon, its magnitude in Romania and reported to the European average. Underground economy in Romania consists of undeclared work (2/3 from the total) and unreported income; it decreased from 33.6% of GDP in 2003 to 28% in 2014, but remained over EU-28 average with about 10 p.p. Among EU-28 countries, only Bulgaria exceeds the size of the underground economy of Romania. The underground economy is a challenge for the leadership of the state which must act simultaneously to stop illegal activities, and to discourage non-declaration of the legal activities. Corruption favours maintaining the underground economy, delays economic development, obstructs democratic processes and affects justice and the law state