An analysis of the shadow economy impact on sustainable regional development

This study is devoted to the analysis of the negative impact of the shadow economy on the sustainable development of regions. The relevance of the topic is due to the fact that the shadow economy, which covers a significant part of the regional economy, prevents the formation of a stable socio-economic environment. The work used official statistical data from the regions of Russia for the period 2010–2023, survey results and expert recommendations. Strengthening the economic security of any region is impossible without a deep understanding and consideration of its unique economic identity. As a result of the analysis, it was found out that the shadow economy leads to significant economic losses due to tax evasion, illegal employment, increased economic crime, corruption and decreased investment attractiveness. This undermines the economic security of the regions, slows down their growth and exacerbates social inequality. For example, regions with a high level of shadow activity experience a GRP decrease by 5–10% annually. In addition, the survey confirms that the shadow economy and corruption are closely linked, with subjective estimates reaching 40% and 30% on key factors. This shows the imperfection of laws and corruption. The respondents noted that weak legal norms and bureaucratic barriers create incentives for retreating into the shadows. This is confirmed by the answers to another question of the questionnaire, that a significant part of the respondents, 65% in total, had direct personal experience of encountering corruption. Thus, in order to combat the shadow economy, it is necessary to strengthen the economic security of regions. It is recommended to simplify tax administration, increase transparency of public services and conduct systematic educational work among the population. These measures are aimed at reducing shadow activity and stimulating sustainable regional development. The aim of the work is to assess the impact of the shadow economy on the sustainable development of the regions of the Russian Federation with an emphasis on the transformation of their economic identity and to develop practical recommendations to minimize negative consequences. To achieve this goal, the following tasks were solved: 1) to analyze modern theoretical and methodological approaches to the definition, structuring and evaluation of the shadow economy, as well as to the concept of “economic identity” of the region; 2) to justify the choice and apply methodological tools for quantifying the scale of the shadow economy at the regional level; 3) to estimate the volume and dynamics of the shadow sector in the economy of the Sakha Republic (Yakutia) for the period 2011–2023 based on the chosen methodology; 4) to analyze the impact of the revealed scale of the shadow economy on such elements of economic identity as the investment climate, fiscal potential and the level of social trust; 5) to develop practical recommendations for the authorities of the region on taking into account the influence of the shadow sector on the development and implementation of economic policies aimed at strengthening economic identity and ensuring sustainable development.

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