Comparison of Shadow Economies: The Case of Ghana, Nigeria and UK

Abstract

This study seeks to assess the size and the trend of the shadow economies of Ghana, Nigeria and the United Kingdom. The multiple indicator and multiple causes model (MIMIC) is employed for this analysis. The model consists of two parts; the structural equation aspect and the measurement aspect. The structural equation model estimates the impact of the observed variables in determining the level of shadow economic activities. The measurement model estimates the coefficients of the indicator variables. Results from the study show variation in the causal factors of shadow economic activities in the various countries. The size of Ghana’s shadow economy stands at 36.73%, Nigeria 47.75% and UK, 15.05% at the end of the 2012 fiscal year. The average level of such activities for the past three decades is 30.20% of the official economy in Ghana, 50.36% in Nigeria and 14.07% in UK.

DOI: 10.5901/mjss.2016.v7n1p248