Social capital as a determinant of the shadow economy in the Republic of Serbia

• Main Authors: Natasa Golubovic, Marija Dzunic
• Format: Article
• Language: English
• Published: University of Kragujevac 2015-08-01
• Series: Economic Horizons
• Subjects: social capital; social networks; trust; shadow economy
• Online Access: http://www.horizonti.ekfak.kg.ac.rs/sites/default/files/Casopis/2015_3/EN/Golubovic_Dzunic_EN.pdf
• ISSN: 1450-863X; 2217-9232

The design and implementation of the measures aimed at incorporating informal economic activities into the existing formal regulatory framework assume the knowledge of the causes and structure of the informal activity. The influence of the institutional factors that encourage the development of the shadow economy (the tax burden, the degree of the regulation of the economy, the capacity of the state administration) were the subject of extensive theoretical and empirical research. In contrast, the impact of social capital, i.e. the characteristics of social ties and relations, on the shadow economy has been investigated to a much lesser extent. Starting from the fact that the informal sector of the Serbian economy is so widespread that it represents a serious obstacle to the business activities of Serbian enterprises, the aim of this study is to investigate whether the characteristics of social ties and relations, or social capital in the Republic of Serbia (RS), represent a fertile ground for the growth of the shadow economy. In this context, the characteristics and frequency of social contacts, particularized trust and institutional trust will be separately analyzed as the determinants of the shadow economy in RS.