Informal Economy In Albania – Its Costs in the Country Development

Abstract

The informal economy is quite a controversial term and difficult to define precisely, but generally it summarizes in itself all unregistered aspects of economic and commercial activity in legal and fiscal system, that basically tent to avoid taxes and fees, the system of social security and health contributions, the mandatory norms of product safety, of their reliability as well as their business social responsibility. The loss that the state and society have suffered from the informal economy is large enough, this seen in different ways. Non-collection of taxes and contributions automatically led to an impoverishment of the state budget and lack of investment in public services. A social responsibility has continuously accompanied and threatened the government performance, and it is especially more vulnerable to the level of pensions and salaries, as well as in the quality of public services and investments. Actually, the debate on the informal economy, on the means and ways to "dominate" such economy, being unable to finally reduce it, is in a critical stage, even in developed countries. According to official statistics, the informal economy fluctuates in levels 5-20 % of GDP in different EU countries. Features of this “type" of economy is that it generally reaches the highest values in developing countries, where economic and social development, culture and respect for the rule of law , are low. The level of informal economy in Albania (actually, according to official statistics accounts for about 33 percent of GDP1) needs to be treated as a real threat to the economic stability of our country. Legal stability (recently there has been a frequent change of laws) is considered Important in reducing the informal economy. The fight against informality requires an integrated legislative package of measures aiming at the improvement, control and the rigorous implementation of the legislation requirements, the promotion of initiatives for a self- breakaway to from informal economy and creation of tangible opportunities to integrate liberated capital in priority development programs, in order not to repeat the negative phenomena that are still holding hostage the Albanian economy.

DOI: 10.5901/mjss.2014.v5n9p642