GOVERNING SHADOWS: INSTITUTIONAL AND FISCAL INFLUENCES ON ECONOMIC FORMALITY IN THE EU
This study investigates the interplay between institutional quality, tax policies, digitalization, and the informal economy across the European Union and two European Union adjacent countries. Principal Component Analysis (PCA) is used for the investigation. The study elucidates two main dimensi...
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| Main Authors: | , |
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| Format: | Article |
| Language: | English |
| Published: |
Academica Brâncuşi
2025-04-01
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| Series: | Analele Universităţii Constantin Brâncuşi din Târgu Jiu : Seria Economie |
| Subjects: | |
| Online Access: | https://www.utgjiu.ro/revista/ec/pdf/2025-02/10_Mastac.pdf |
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| Summary: | This study investigates the interplay between institutional quality, tax policies, digitalization, and the
informal economy across the European Union and two European Union adjacent countries. Principal
Component Analysis (PCA) is used for the investigation. The study elucidates two main dimensions: the
correlation between institutional robustness and digitalization, and the association of tax efficiency with
economic compliance. The findings indicate that nations with strong institutions, minimal corruption, and
sophisticated digital infrastructures, such as Denmark, Sweden, and Finland, are characterized by smaller
informal economies and higher tax compliance rates. In contrast, countries like Romania, Bulgaria, and
Slovakia, which contend with institutional weaknesses, show elevated levels of informality and reduced tax
compliance. The study recommends prioritizing governance reforms aimed at improving administrative efficiency
and transparency in nations with frail institutional structures before implementing digital tax solutions.
Simultaneously, countries with moderate institutional capabilities but inefficient tax collection systems could
benefit from immediate digital enhancements. Overall, this research advocates for an integrated policy
framework that marries institutional strengthening with digital innovations to foster economic transparency and
enhance public revenue collection, paving the way for sustainable economic development within the European
Union. |
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| ISSN: | 1844-7007 2344-3685 |