The underground economy is viewed as part of the economy of a country that focuses on illegal activities. Vaidya (2020) indicated that ‘the main for the existence of an underground economy is that people can easily access products or services that may be banned by the economy.” Casual observers are likely to view only a few signs of the existence of a large underground economy, essentially during day hours. During the evening hours, one can view the presence of gang activity, prostitutes, drug dealers, gambling, and other negative activities. However, such activities are kept from tourists and visitors. Likewise, legal exercises, for example, producing goods and services which are under announced, the production of music and videos pirated copied, and unlawful manufacturing of drugs, etc. contributing to the underground economy. An underground economy thrives on high taxes as well as restrictions on individuals hoping to benefit from the underground economy with a blooming outcome.
High taxes could be either private or corporate income tax and include high tariffs on importing goods. Such high taxes on importing goods cause smuggling of such goods lucrative. Likewise, strategically, in a situation involving a solitary party in power, or a dictator, is a definite indication that the level of corruption is high, which within itself is a parallel underground economy. The items listed above are signs that international managers should watch for, because missing these signs could cause errors with estimating the size and market potentials. Also, it could cause ethical issues consuming the competitors are empowering and critical for the underground economy.
Vaidya, D. (2020). What is underground economy? Retrieved from .
