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Underground Economy Essay

718 words - 3 pages

This research will look on the concept of the underground economy, a global phenomenon that can be observed in our society, and will focus on its effect on the condition of the involved groups and to determine its reality in the community of Baguio city. While there is a confusion on the real definition of the underground economy, its connection with illegal transactions that works in the “dark”, it is important to emphasize the part of the underground economy that is more ideal to analyzed which is the kind of business we can witness in the streets. I’m talking about the part that exposes the poverty and unemployment situation in the country, those who earn income and do not pay taxes to satisfy their family’s physiological needs on a daily basis. In order to understand the purpose of the research, the big picture shows that it shares a big portion of the country’s gross national product which estimates up to 43.4 percent in 2000 according to a report of the Trade Union Congress of the Philippines.
As supported by the statistics, it can be considered to be a factor in interpreting the economy’s situation; while it is not still clear how economic theories and growth data can reflect those things that happen in the shadow. Voicu (2010) would argue that this part of the economy somehow shows the reality and is not given a proper attention on how it serves as a driver of the economy. According to her, its existence is due to the human nature and human condition accompanied by the social issues that causes burden in their lives which encourage them to find an instrument to use for adjustment and alternative for survival. This research will tackle how underground economy portrays our real economic standing and in the process determine its role on the people engaged in the activity.
Schneider and Enste (2002) reveal that the underground economy, if we apply it in the Philippine context, continue to exist because of the low wage rates that go together with high tax rates and other payments that almost exhausts the income of the workers. ...

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