Social and Legal Studios
ISSN 2617-4162
e-ISSN 2617-4170
Publisher: Lviv State University of Internal Affairs
Abstract
Ukraine’s economy quickly integrated into the system of shadow financial flows and used standard tools to manipulate export and import prices and financial instruments. In terms of cumulative outflows of shadow capital, Ukraine is among the top twenty countries. The research relevance is predefined by the main directions of legalization of economic processes, including in the segment of shadow imports, which involve the formation of optimal institutional strategies for the behaviour of social agents (government and business). The research aims to select the Government’s strategy for legalizing unorganized imports, which will allow the establishment of effective interaction between social agents on mutually beneficial terms. Research methods include mathematical analysis and game theory, used to build mathematical models, which reveal the intrinsic rationality of individual interactions, aggregating a set of social situations into several options and reducing the uncertainty of a set of behavioural options to a clear and stable pattern of regular interaction. The results showed that the level of employees’ salaries is not crucial for overcoming shadow imports, but the level of integrity of customs officers is a more important indicator. The article shows that the mechanism of legalization of shadow operations (in particular, unorganized imports) should be based not only on economic but also on social parameters: the level of moral and professional principles of customs officers. The practical value of the research results is to improve the mechanisms of legalization of unorganized imports in Ukraine.
Keywords: corruption; shadow economic activities; integrity; strategies of import legalization; tax morale
Suggested citation
[1] Alm, J., & Torgler, B. (2006). Culture differences and tax morale in the United States and Europe. Journal of Economic Psychology, 27(2), 224-246. doi: 10.1016/j.joep.2005.09.002.
[2] Andriani, L., Bruno, R., Douarin, E., & Stepien-Baig, P. (2022). Is tax morale culturally driven? Journal of Institutional Economics, 18(1), 67-84. doi: 10.1017/S1744137421000072.
[3] Becker, G.S. (1968). Crime and punishment: An economic approach. Journal of Political Economy, 76(2), 169-217.
[4] Brandt, K. (2023). Illicit financial flows and developing countries: A review of methods and evidence. Journal of Economic Surveys, 37(3), 789-820. doi: 10.1111/joes.12518.
[5] Business worsened the assessment of the customs performance to a two-year low level. (2021). Retrieved from https://eba.com.ua/en/otsinka-biznesom-roboty-mytnytsi-vpala-do-dvorichnogo-minimumu-opytuvannya-eva.
[6] Carre, F., Horn, P., & Bonner, C. (2020). Collective bargaining by informal workers in the global South: Where and how it takes place. In J. Charmes (Ed.), Research handbook on development and the informal economy (pp. 285-316). Cheltenham – Northampton: Edward Elgar Publishing. doi: 10.4337/9781788972802.00022.
[7] Communications Department of the Secretariat of the CMU. (2021). Ukraine introduces a customs information exchange system with the EU, thereby allowing to minimize abuse at customs, says Denys Shmyhal. Retrieved from https://www.kmu.gov.ua/en/news/ukrayina-vprovadzhuye-sistemu-obminu-mitnoyu-informaciyeyu-z-yes-yaka-dozvolit-minimizuvatizlovzhivannya-na-mitnici-denis-shmigal.
[8] Daude, C., Gutiérrez, H., & Melguizo, A. (2013). What drives tax morale? A focus on emerging economies. Hacienda Pública Española, 207(4), 9-40.
[9] Dobel, J.P. (2022). Integrity and corruption. In A. Farazmand (Ed.), Global encyclopedia of public administration, public policy, and governance (pp. 6858-6865). Cham: Springer. doi: 10.1007/978-3-030-66252-3_2824.
[10] Garoupa, N. (2014). Economic theory of criminal behavior. In G. Bruinsma, & D. Weisburd (Eds.), Encyclopedia of criminology and criminal justice (pp. 1280-1286). New York: Springer. doi: 10.1007/978-1-4614-5690-2_409.
[11] Gibbs, J.P. (1968). Crime, punishment and deterrence. Southwestern Social Science Quarterly, 48(4), 515-530.
[12] Helmke, G., & Levitsky, S. (2004). Informal institutions and comparative politics: A research agenda. Perspectives on Politics, 2(4), 725-740.
[13] Horodnic, I.A., Williams, C.C., Windebank, J., Zaiț, A., & Ciobanu, C.I. (2021). Explaining consumer motives to purchase in the informal economy. PLoS ONE, 16(10), article number e0258686. doi: 10.1371/journal.pone.0258686.
[14] Kastlunger, B., Lozza, E., Kirchler, E., & Schabmann, R. (2013). Powerful authorities and trusting citizens: The Slippery Slope Framework and tax compliance in Italy. Journal of Economic Psychology, 34, 36-45. doi: 10.1016/j.joep.2012.11.007.
[15] Kelmanson, B., Kirabaeva, K., Medina, L., & Mircheva, B. (2019). Explaining the shadow economy in Europe: Size, causes and policy options. IMF Working Paper, 19/278. Retrieved from https://ssrn.com/abstract=3523151.
[16] Kemme, D.M., Parikh, B., & Steigner, T. (2020). Tax morale and international tax evasion. Journal of World Business, 55(3), article number 101052. doi: 10.1016/j.jwb.2019.101052.
[17] Koumpias, A.M., Leonardo, G., & Martinez-Vazquez, J. (2020). Trust in government institutions and tax morale. ICEPP Working Papers, 135. Retrieved from https://scholarworks.gsu.edu/icepp/135.
[18] Lago-Peñas, I., & Lago-Peñas, S. (2010). The determinants of tax morale in comparative perspective: Evidence from European countries. European Journal of Political Economy, 26(4), 441-453. doi: 10.1016/j.ejpoleco.2010.06.003.
[19] Morris, M.L., & Newman, M.D. (1989). Official and parallel cereals markets in Senegal: Empirical evidence. World Development, 17(12), 1885-1906. doi: 10.1016/0305-750X(89)90269-6.
[20] North, D.C. (1990). Institutions, institutional change and economic performance. Cambridge: Cambridge University Press. doi: 10.1017/CBO9780511808678.
[21] Official website of the State Customs Service of Ukraine. (n.d.). Retrieved from https://customs.gov.ua/en/statistika-tareiestri.
[22] Prytula, Kh. (2019). Cross-border cooperation of Ukraine with the EU countries: Current challenges and possibilities. Lviv: Institute of Regional Research named after M.I. Dolishniy of NASU.
[23] Santiso, C. (2022). Trust with integrity: Harnessing the integrity dividends of digital government for reducing corruption in developing countries. DESA Working Paper, 176. Retrieved from https://www.un.org/sites/un2.un.org/files/wp176_2022.pdf.
[24] Tartani, D. (1970). Equity versus efficiency in law enforcement. Public Policy, 18(3), 451-459.
[25] Titeca, K., & Flynn, R. (2014). “Hybrid Governance,” legitimacy, and (il)legality in the informal cross-border trade in Panyimur, Northwest Uganda. African Studies Review, 57(1), 71-91. doi: 10.1017/asr.2014.6.
[26] Williams, C.C. (2021). Evaluating entrepreneurs’ motives for participating in the informal sector in Europe. Journal of Developmental Entrepreneurship, 26(01), article number 2150002. doi: 10.1142/S1084946721500023.