Informal economy represented 18,4% of GDP in 2009
Author: Ricardo Leopoldo
Source: Época Negócios - São Paulo / SP - 21/07/2010
State Agency
SÃO PAULO - The underground economy, known as the informal economy, represented 18,4% of the Gross Domestic Product (GDP) in 2009, equivalent to R $ 578,4 billion, compared to 21% of GDP in 2003. This is the result of an unprecedented study that calculates the Underground Economy Index, carried out by the Brazilian Institute of Economics of the Getúlio Vargas Foundation (Ibre-FGV) and commissioned by the Brazilian Institute of Competition Ethics (Etco). According to the person responsible for the study, professor Fernando Holanda Barbosa Filho, the indicator tries to measure all the production of goods and services that has not been communicated to the government.
According to Barbosa Filho, the main factors responsible for the reduction of the underground economy in Brazil are the increase in GDP growth, the increase in the number of people formalized in the labor market and the expansion of the granting of credit to workers.
Other important elements are related to the modernization of the economy, greater commercial opening, with the advance of exports, and the evolution of collection systems, such as electronic invoices. The reduction of tax bureaucracy, with the establishment of the Super Simples regime, also contributed to the reduction of the informal economy in the country.
“GDP growth is a holy remedy”, commented Luiz Schymura, director of Ibre. According to him, the expansion of the activity level allows institutional improvements in the country, such as the search for greater productive efficiency and the increase in formalization in the labor market.
In Barbosa Filho's opinion, if Brazil grows around 7% this year, as indicated by President Luiz Inácio Lula da Silva's forecasts, it is “feasible” that the underground economy index reaches the 18% of GDP mark at the end 2010. “The expectation is that, with the continuation of the country's expansion, the underground economy will continue to fall, although it is not possible to say now what the exact level of reduction would be.”
According to those responsible for the research, informality in Brazil still reaches high levels, because in the member countries of the Organization for Economic Cooperation and Development (OECD), the rate is around 10% of GDP. "The informal economy in Brazil is roughly equivalent to Argentina's GDP," said André Franco Montoro Filho, executive director of Etco. According to him, in other Latin American countries this level is around 30% of GDP.
In Montoro Filho's assessment, the reduction in the underground economy will indicate the evolution of the level of development of the country's economy. He considers that the term informal economy is a kind of euphemism for the illegal economy, which includes those who do not pay taxes for their commercial activities. . "This is bad for Brazil, because it sends negative signals to businessmen and creates a bad business environment", he commented.
According to him, the underground economy reduces the investments of the companies, because a part of them does not find incentives to expand their activities if the competitors do not pay taxes. In addition, if the economy has many activities that are not formalized, companies experience difficulties in finding partners in the country and abroad in order to make investments, given the precarious contractual relations between companies and suppliers.
"Taking into account the current tax burden, it is possible to estimate that there is tax evasion of approximately R $ 200 billion per year in Brazil", commented Montoro Filho. “Imagine how many investments could be made with this amount, including on roads. Investments made by the federal government in the year alone totaled R $ 30 billion, ”he said. According to him, the reduction of the underground economy is fundamental to expand the Gross Fixed Capital Formation in the country, generate formal jobs and improve the population's income.
(Ricardo Leopold)
RELATED
Informal economy represented 18,4% of GDP in 2009
Author: Ricardo Leopoldo, from Agência Estado
Source: Estadão - São Paulo / SP - ECONOMY - 21/07/2010
This is the result of an unprecedented study that calculates the Underground Economy Index, carried out by the Brazilian Institute of Economics of the Getúlio Vargas Foundation
SÃO PAULO - The underground economy, known as the informal economy, represented 18,4% of the Gross Domestic Product (GDP) in 2009, equivalent to R $ 578,4 billion, compared to 21% of GDP in 2003. This is the result of an unprecedented study that calculates the Underground Economy Index, carried out by the Brazilian Institute of Economics of the Getúlio Vargas Foundation (Ibre-FGV) and commissioned by the Brazilian Institute of Competition Ethics (Etco). According to the person responsible for the study, professor Fernando Holanda Barbosa Filho, the indicator tries to measure all the production of goods and services that has not been communicated to the government.
According to Barbosa Filho, the main factors responsible for the reduction of the underground economy in Brazil are the increase in GDP growth, the increase in the number of people formalized in the labor market and the expansion of the granting of credit to workers. Other important elements are related to the modernization of the economy, greater commercial opening, with the advance of exports, and the evolution of collection systems, such as electronic invoices. The reduction of tax bureaucracy, with the establishment of the Super Simples regime, also contributed to the reduction of the informal economy in the country.
“GDP growth is a holy remedy”, commented Luiz Schymura, director of Ibre. According to him, the expansion of the activity level allows institutional improvements in the country, such as the search for greater productive efficiency and the increase in formalization in the labor market.
In Barbosa Filho's opinion, if Brazil grows around 7% this year, as indicated by President Luiz Inácio Lula da Silva's forecasts, it is “feasible” that the underground economy index reaches the 18% of GDP mark at the end 2010. “The expectation is that, with the continuation of the country's expansion, the underground economy will continue to fall, although it is not possible to say now what the exact level of reduction would be.”
According to those responsible for the research, informality in Brazil still reaches high levels, because in the member countries of the Organization for Economic Cooperation and Development (OECD), the rate is around 10% of GDP. "The informal economy in Brazil is roughly equivalent to Argentina's GDP," said André Franco Montoro Filho, executive director of Etco. According to him, in other Latin American countries this level is around 30% of GDP.
In Montoro Filho's assessment, the reduction in the underground economy will indicate the evolution of the level of development of the country's economy. He considers that the term informal economy is a kind of euphemism for the illegal economy, which includes those who do not pay taxes for their commercial activities. . "This is bad for Brazil, because it sends negative signals to businessmen and creates a bad business environment", he commented.
According to him, the underground economy reduces the investments of the companies, because a part of them does not find incentives to expand their activities if the competitors do not pay taxes. In addition, if the economy has many activities that are not formalized, companies experience difficulties in finding partners in the country and abroad in order to make investments, given the precarious contractual relations between companies and suppliers.
"Taking into account the current tax burden, it is possible to estimate that there is tax evasion of approximately R $ 200 billion per year in Brazil", commented Montoro Filho. “Imagine how many investments could be made with this amount, including on roads. Investments made by the federal government in the year alone totaled R $ 30 billion, ”he said. According to him, the reduction of the underground economy is fundamental to expand the Gross Fixed Capital Formation in the country, generate formal jobs and improve the population's income.
