The ‘black’ economy
• There is one sector of the economy where there are no
imputations for the value of goods and services supplied.
• This is the black economy (otherwise known as the shadow or
underground economy).
• This is the sector of the economy where activities are hidden
from the government.
• In the developing world especially, much economic activity,
such as the selling of groceries on markets or the provision of
barber and shoe-shining services on the city streets, go under
the government radar when computing GDP.
• This type of economic activity is known as the ‘informal
economy.’ According to Ireland (2012), informal economic
activity accounted for between 50 and 75 percent of
nonagricultural employment in developing countries.