REASONS AND CONSEQUENCES OF HIDDEN ENTREPRENEURSHIP IN UKRAINE

Abstract

The purpose of the article is to study the essence, causes and consequences of hidden entrepreneurship in Ukraine. The shadowing of economic activity hinders the development of the country’s competitiveness, complicates integration into the European community, negatively affects the growth of social living standards of the population. In Ukraine, there is no single approach to the interpretation of the concept of “hidden entrepreneurship”. In most approaches, this phenomenon is associated with illegal business. In some studies, hidden entrepreneurship is associated with the shadow economy. This creates discrepancies in the indicators of the level of the shadow economy in Ukraine’s GDP, which distorts the reflection of the real state of threat to the effective development of the economy. The problems of shadowing economic activity have been studied for a long time. At the same time, deepening the understanding of the causal links between hidden entrepreneurship and the prospects of economic development in modern Ukraine requires more detail. The methodological basis of this work is the synthesis of general scientific methods of theoretical and empirical research (method of cognition, analysis and synthesis, generalization and systematization of information). Results. One of the main parameters of hidden entrepreneurship is the focus on the conscious reflection of performance. Thus, informal economic activity, which is mainly related to housekeeping, small services, irregular work, etc., acquires signs of deliberate concealment as a result of legal production and sale of unregistered goods and services. Carrying out economic operations prohibited by law turns economic activity into illegal or criminal. Thus, each subsequent type of hidden business receives additional characteristics regarding the legality of economic transactions. We identify four main groups of reasons for the emergence of hidden entrepreneurship: economic, socio-political, administrative, moral and ethical, psychological reasons. Hidden entrepreneurship provides employment to the part of the country’s population that has no sources of income (pensioners, pregnant women, people with no work experience, youth, minors, etc.). In addition, hidden business goods and services are affordable for socially vulnerable groups, partially reducing the social tensions that exist in society. Practical implications. Given that the level of the shadow sector in Ukraine is quite high (over 30% of GDP) now, its impact on economic development is negative. Therefore, identifying the root causes, as well as awareness of the negative consequences of further development of hidden entrepreneurship for the national economy should become the foundation for the transformation of the institutional environment in the country. Understanding these implications will identify the most promising ways to reduce the level of the shadow economy and promote the use of the positive effects of hidden entrepreneurship to develop the necessary incentives for entrepreneurs. Value/originality. The use of comprehensive analysis allows to identify the main problems of hidden entrepreneurship, taking into account the specifics of its manifestation in modern conditions.