Methodological aspects of economy legalization in the conditions of globalization

Methodological aspects of economy legalization in the conditions of globalization 

 

CONTENTS 

INTRODUCTION  

      Chapter 1. ESSENCE, STRUCTURE AND FEATURES of SHADOW ECONOMY SECTOR

      Chapter 2. ESTIMATION OF LEVEL AND SIZE OF SHADOW ECONOMY SECTOR

      Chapter 3. CONCEPTION OF LEGALIZATION THE SHADOW ECONOMY IN UKRAINE ON EXPERIENCE OF THE DEVELOPED COUNTRIES 

CONCLUSIONS

 

General description of work

     Forming in Ukraine of market economy, integration of our state in outer economic space substantially influences on the feature of development of economic policy of country and determines priority directions of conduct of business. The inalienable phenomenon of the transitional stage of development of economy and market relations is growth of particle of illegal sector of national economy.

     Scales of shadow economic activity for today are unprecedented even for transitional economies. As evaluated by analysts, in a shadow sphere made at least 50% gross domestic product. The unconcern of shadow economy consists yet and in that it is the environment of activity of criminal groups. Businessmen which try in «shade» to rescue the business as a rule, get under control of criminals.

     Actuality of research theme. Globalization processes which take a place today in the world open new possibilities for development of national economies and simultaneously create new threats, above all things in a financial sphere. For Ukraine the financial system of which is in the process of becoming, a comprehensive analysis and account of this situation is extremely needed both from point of the subsequent deepening of reforms and from positions of development of private business. In addition, globalization of financial sphere is directly related to the problem of shadow economy, as a removal or weakness of national limitations of transferring of capitals creates shadow smart dealers wide possibilities in relation to an export from a country or laundering of tremendous money amounts.

      One of the first, who probed and described the phenomenon of shadow economy, there was the American scientist P. Gutmann in the work the «Underground economy». In different times criminal economic activity was probed by such economists,  as M. Fridman, D. Stigler, Dj. M. B'yukenen,  
V. Lands, P. Ruby, M. Olson, G. Tallok, L. Torrou et al.

     Shadow entrepreneurial activity on a black market is examined in labours  
L. Paoli, P. Ruby, Dj. M. B'yukenena, P. Reytera and other. In opinion of P. Ruby, the considerable particle of criminal commercial activity has, as a rule, character is unorganized, that is why he uses in the labors a term activity «disorganizes»

     Researches of shadow economy as the socio-economic phenomenon began to light up in professional literature relatively recently – from the middle of past century and mainly in works of foreign researchers. In Ukraine first, who thoroughly probed the question of shadow economy was, O. Turchynov. Among the Ukrainian scientists which probe the processes of shadow economy and ways of their diminishing it is possible to select A.Galchynskyy, O. Vlasyuk, V.Geyets, A.Bazelyuk, T.Koryagin, O.Mandybura, A.Mokiy, M.Fleychuk, Z.Varnaliy, Ya.Zhalilo, O.Turchynov etc.

     However, without regard to the far of works, where theme of illegal of the economic systems is probed, in scientific literature yet not enough complex researches of theoretic - methodological aspects of this phenomenon. The ways of diminishing of shadow economy are not enough studied in a theoretical plan in Ukraine, especially taking into account the specific of development economy of transition-type.

     The choice of this theme is conditioned importance of study of features of functioning of shadow economic activity. Illegal sector has an influence on all socially are economic processes which take a place in society. Ignoring of this factor results in unforeseeable consequences, considerable errors and miscalculations at determination of macroeconomic policy of Ukraine and inadequate estimation of processes and progress of economy trends.

     Purpose and task of research. A purpose of master's degree work is realization of theoretical generalizations of features of shadow economic activity, systematization of theoretical information about a shadow economy, choice of methods of estimation of its scales in the conditions of domestic economy and determination of the methodical schemes of illegal economy in Ukraine. For achievement of this purpose implementation of such tasks was foreseen:

• study of the theoretical going near systematization of the phenomenon shadow economies;
• a lead through the analysis of features functioning of underground economies is in the countries with different type of economic development;
• to systematize the basic methods of study the shadow economic processes, especially to learn the ways of laundering the shadow capitals in Ukraine;
• lead through the analysis of reasons and consequences of existence of shadow economic activity;
• to develop the methodical going for legalization the shadow economy in Ukraine and define the methods of counteraction laundering of shadow capitals.

    Shadow economic activity of being in a charge subjects  and its influence comes forward the object of master's degree research on a macroeconomic situation in countries with the different types of the economic system.

    The subject of master's degree research is methodology, methods of estimation and principles of legalization the shadow economy in a domestic economy.

    Methodological and informative bases. The legislative acts of Ukraine, international agreements and normative documents of international economic organizations, official information of the Commitment of statistics in Ukraine, international statistical and financial organizations, materials of domestic and foreign researchers, magazines and international conferences, served as a methodological and informative base of research.

    Substantive provisions are subscribe in master's degree work was given a report and came into a question on a student scientific forum «Society, economy, education: youth aspect» (Lvov, 2007.) and to the scientific - practice conference of students and young scientists «Problem and prospect socially – economic development of Ukraine» ( Simferopol', 2008.) 

 

Basic Maintenance of work

    In an introduction grounded actuality of theme, said about purpose, task, object, subject and research methods.

    In the first chapter «Essence, structure and features of shadow sector of economy» basic concepts and constituents of shadow economic activity are systematized. The category of shadow economy can be examined in  the construction of such components, as: unofficial sector, criminal and illegal. The unofficial sector of economy includes activity of do-it-yourself activities, which is not taken into account to GDP. Criminal activity foresees activity of subjects, which is forbidden the law (trafficking drugs and weapon, human (beings) traffic, industrial espionage, computer crimes, corruption, commercial grafts). Illegal foresees moving of legal commodities, services and financial assets without their documentary registration. After the sphere of influence an illegal economy is divided into internal, external and transnational which goes out outside national scopes with subsequent transformation in a global shadow economy sector.

      For the types varieties of shadow activity examine their intercommunications with a «white» («first», official) economy, and also with subjects and objects of economic activity (Table. 1).

      Table 1

      Types varieties of shadow economy

      Shadow economy – it is activity which foresees the receipt of the personal benefit by intentional distortion of economic indicators is unregulated a law.

      It is needed to notice that close intercommunication is between the various displays of transnational illegal economy. For example, drug ring not only sell narcotic facilities often but also take part in trafficking weapon, is the proprietors of illegal enterprises from processing of harmful matters and active participants of white-laundering, realization of assassinations. The various variants of appeal of facilities between the legal and illegal sectors of economy are reflected in a table 2.

      Table 2

      Movement of capitals between the legal and illegal sectors of economy

      One of substantial displays of functioning of shadow economy there are national capital exports outside a country. Globalization of streams of capital has an ambiguous influence on the dynamics of world economic processes. From one side, the export of capital promotes to transnational productions and to providing of competitiveness on international markets. From other – «escape of capital» negatively affects to national economic development.

    In accordance with the asset 2 of the Ukraine’s Law of legalization of revenue earned with criminal actions, actions, directed on a concealment or disguise of illegal origin of facilities or other property or domain by them, behave to legalization (laundering) of profits, rights on such facilities or property, sources of their origin, location, moving, and similarly acquisition, domain or use of facilities or other property, on condition of awareness a person, that they were profits.

    Taking into account actuality of problems, related to laundering of the criminally purchased facilities, on meeting of leaders of countries of the «G7» in Paris in 1989 year was created Financial Action Task Force (FATF).

    In opinion of scientists, process of laundering of facilities, got a criminal way, can make a few stages. The experts of UNO select the four-phase model of laundering the facilities.  The Italian scientist P. Bernaskoni selected two-phases  process of laundering the facilities. The first phase is the own laundering of facilities, in the process of which short-term operations are from the exchange of illegal facilities. The second phase is returning of money facilities in a legal appeal by a leadthrough middle – and long– term operations.

      By the most widespread model three – phase. This model includes such three stages: placing, stratification and integration.

      Placing – a proprietor inlays a money to the financial system with the purpose of deprived plenty of cash on a hand. The stage of placing is vulnerable, because here is a most chance of opening of illegal nature of money.

      Stratification is the next stage. It is series of operations from the concealment the origin of money. They are often sent from one country to other, and then grow into various investments.

      Integration is the final stage, when a money is full taken in a legal economy, where they can be utilized with any purpose.

      To the typical charts of legalization the criminal facilities it is possible to take legal entities with the signs of fictitious nature, export-import operations (fictitious, speculative), «merry-go-round commodity charts», which are accompanied the illegal compensation of VAT, operation with nonresidents, incorporated in offshore areas, operations security-related, operations from converting of facilities in a cash on a hand, operations from Deposit Insurance.

      To the difficult charts, launderings of «dirty» facilities belong:

      –dummy activities with securities with the transfer of costs for a border;

      –speculative operations are at forming of charter the fund of joint-stock company;

      –dummy activities are in the field of auto of insurance;

      –investment operations of physical persons  – nonresidents with securities with the use of «dirty» facilities;

      –crediting in security for «dirty» facilities on a deposit with the leadthrough of operations for a border;

      –operations with laundering the facilities by certificates on the bearer of issued in foreign currency;

      –speculative commodity operations are with multiple resale on an export.

    Charts of laundering of facilities can be difficult, tangled, to have a lot of forks, but all of them consist of comparatively two-bit of «elementary operations». The examples of such elements which more difficult charts are formed from are farther resulted.

      In connection with complication in certain agents and processes of shadow economic activity, by a concealment from an account and control of economic activity,  possibility of the real estimation of scales of this phenomenon it is enough limited. Hereupon for their estimation the various mediated methods are utilized.

      The methods  of calculation  of volumes  of shadow  economy  can  be divided  into three  basic  groups:  registration – statistical, opened verification and special economic are legal methods. Among registration – statistical methods select such, as: method of specific indicators; structural method; method of soft design; expert method; methods are mixed.

      The feature of modern economic criminality is it character is hidden, that is why the adequate estimation of the got criminal profits is possible only in the process of exposure of them at investigation of crime and for their estimation it is necessary to apply the special economic - legal methods of analysis.

     In the second chapter «Estimation of level and volumes of shadow sector of economy» found out the features of origin and volumes of shadow sector in countries with the different level of development.

     One of destructive consequences of globalization is an increase of scales to the illegal sector of world economy. This problem is actual not only for developing countries and countries with the transition type of economy but also for the developed countries, taking into account certain objective conformities to the law of development of world economy.

     Probing essence of shadow economy it was set that historically it has social nature of origin, related to the features of psychological development of personality. Foreign scientists set that from 10 persons each three potentially search possibility to accomplish an illegal appropriation, three persons will accomplish him necessarily, if terms and only 4 persons will be created it will not be accomplished under any circumstances. Indisputability of such fact is grounded and well-proven the presence of shadow economy in those or other scales in entire without an exception countries, that confirms social nature of origin of this phenomenon.

     After the estimations of Organization of economic collaboration and development illegalization of economy in the world for the last 5 years grew annually on 6,2 %, and the general economy growing made on the average 3,5%. International organization on a fight against laundering of facilities estimates the real volumes of shadow economy in highly developed countries at the level of 17% from GDP, in countries which develop – 40 % from GDP, in countries with a transitional economy – over 20 % from GDP (Table. 3).

      Table 3

 A shadow economic performance indicator  is for the countries of different type.

     To the basic factors which assist development of shadow economy in the countries of different type (the developed countries and countries are with a transitional economy) take:

• high level of the tax loading;
• regulation of economic activity of economic subjects is from the side of the state;
• considerable scales of state sector are in an economy;
• trans national crimes and globalization of economy;
• monopolization of separate sectors of economy;
• low level of social defence;
• insolvency of market economy effectively to counteract external influences;
• incompleteness and unauthenticated of statistical information;
• imperfection of the political system;
• insufficient motivation is to legal economic activity;
• absence of interactive dialog is between the organs of state administration and businessmen and public.