The underground economy in transition countries from the perspective of globalization: The case of Vietnam

  • Ha Hoang University of Economics - The University of Danang, Vietnam.
Keywords: Underground economy, trade openness, shadow economy, globalization, international integration.


The underground economy, also known as the shadow economy, has been recognized for a long time and increasingly plays an important role in economies around the world, especially for developing countries like Vietnam. Over the past few years, the strong growth of the Vietnamese economy has recognized the development and significant contribution of informal economic activities. This study was conducted to evaluate the effects of globalization and economic openness on the size of the informal economy to fill the theoretical gap and proposed appropriate recommendations for policymakers. The research uses qualitative and quantitative analysis methods. We collected KOF Globalization Index from ETH Zurich - Swiss, the trade index from World Bank and the size of the underground economy in Vietnam from the research of Medina and Schneider (2018) for analyzing. The results show that the trade openness has a positive impact on the development of globalization in Vietnam. Also, the promotion of globalization plays a vital role in reducing the size of the underground economy in Vietnam. Several implications for policy makers has been proposed based on our findings.


Download data is not yet available.

Author Biography

Ha Hoang, University of Economics - The University of Danang, Vietnam.

University of Economics - The University of Danang, Vietnam.


Akhmeduev, A. (2020). Globalization and population precariation: challenges and tendencies of the new world order. Amazonia Investiga, 9(25), 242-250.

Alcala, F. and Ciccone, A. (2001). "Trade and Productivity'. Centre for Economic Policy Research Paper DP3095".

Bajada, C. and Schneider, F. (2005). "The shadow economies of the Asia‐Pacific." Pacific Economic Review 10(3): 379-401.

Buehn, A. and Schneider, F. (2008). "MIMIC models, cointegration and error correction: An application to the French shadow economy".

Cagan, P. (1958). "The demand for currency relative to the total money supply." Journal of political economy 66(4): 303-328.

Chaudhuri, K.; Schneider, F. and Chattopadhyay, S. (2006). "The size and development of the shadow economy: An empirical investigation from states of India." Journal of Development Economics 80(2): 428-443.

Dell'Anno, R. (2007). "The shadow economy in Portugal: An analysis with the MIMIC approach." Journal of Applied Economics 10(2): 253-277.

Dowrick, S. and Golley, J. (2004). "Trade openness and growth: who benefits?." Oxford review of economic policy 20(1): 38-56.

Gasparėnienė, L.; Remeikienė, R. and Heikkila, M. (2016). Evaluation of the impact of shadow economy determinants: Ukrainian case. Intellectual Economics, 10(2): 108-113.

Gygli, S. Haelg, F. Potrafke, N. and Sturm, J. (2019): The KOF Globalisation Index – Revisited, Review of International Organizations, 14(3), 543-574.

Hirschman, A.O., (1970). Exit, voice, and loyalty: Responses to decline in firms, organizations, and states. 25: Harvard university press.

Khiyavi, A., and Shamloo, B. (2019). The globalization of criminal law focuses on organized crime. Amazonia Investiga, 7(12), 215-225.

Medina, L. and Schneider, F. (2018). Shadow economies around the world: what did we learn over the last 20 years?

Medina, L. and Schneider, F. (2017). "Shadow economies around the world: New results for 158 countries over 1991-2015".

OECD-ILO-IMF-CIS, S., (2002). Measuring the Non-Observed Economy: A Handbook. Paris, OECD.

Rodrik, Dani. (2002). "Trade Policy Reform and Institutional Reform." Development, trade and the WTO: A handbook.

Schneider, F. and Dominik H. Enste. (2000). "Shadow economies: size, causes, and consequences." Journal of economic literature 38(1): 77-114.

Schneider, F. Buehn, A. and Montenegro, C. (2010). "Shadow economies all over the world: New estimates for 162 countries from 1999 to 2007." World Bank policy research working paper 5356.

Staff, O. E. C. D. (2005). OECD handbook on economic globalisation indicators. OECD.

Tatsiy, V. Y., & Danilyan, O. (2019). The impact of globalization processes on the legal sphere. Amazonia Investiga, 8(22), 580-586. URL:

Torgler, B. and Schneider, F. (2009). "The impact of tax morale and institutional quality on the shadow economy." Journal of Economic Psychology 30(2): 228-245.

Vuletin, G.J., (2008). Measuring the informal economy in Latin America and the Caribbean: International Monetary Fund.

Wedderburn, C. Chiang, P. and Rhodd, R. (2012). "The informal economy in Jamaica: Is it feasible to tax this sector?." Journal of International Business and Cultural Studies 6(1): 1-13

Xuân, V., (2019). From 2020, underground economy will be included in GDP. Cafebiz.
How to Cite
Hoang, H. (2020). The underground economy in transition countries from the perspective of globalization: The case of Vietnam. Amazonia Investiga, 9(29), 234-242.