The shadow economies of the Asia-Pacific

Despite continuous government attempts to increase taxpayer compliance, the shadow economy continues to offer a way for taxpayers to evade their taxpaying obligations. The consequences are clear: policy-makers have increasingly imperfect knowledge about the state of economic affairs as shadow economy activity expands. We provide the first known estimates of the shadow economy for 17 Asia-Pacific countries. We show that, not only have these activities grown over the last ten years, but countries with relatively thin taxpayer compliance initiatives experience the greatest shadow economy activity.