Ceyhun Elgin and Oguz Oztunali are two economists who have been looking at the size of black-market economies around the world. Using a dataset with 7,395 observations for 161 countries from 1950 to 2009, they're looking into how the size of black markets differs in rich and poor countries.
Their estimate of the (mean) size of the shadow economies is 22.67 percent of world GDP. Elgin and Oztunali note a downward trend in the size of the black markets around the world.
For almost all country groups (except for the post-Socialist one), we observe a declining trend over time. However, the pace of the reduction seems to lose some momntum in the last decade. Somewhat more interestingly, we observe a spike staring in 2007. Considering the emergence of the global economic crisis, this could give further support for the hypothesis that the size of the shadow economy is countercyclical [ ... ].Another, not too surprising, result Elgin and Oztunali find is that Latin American and sub-Saharan economies have significantly larger shadow economies than the other groups of countries, while the OECD-EU group has a significantly smaller shadow economy.
In Figure 2, we group countries with respect to GDP per-capita and then report the average GDP-weighted shadow economy size in each group. Here, we divide the countries into five categories – poorest, second, third, fourth and the richest 20%. Not surprisingly, richer countries tend to have a smaller shadow economy; [ ... ]How much of the Lain American black market is drugs and how much of the sub-Saharan shadow economies is related to political corruption? Related to these questions is the question of whether rich countries have smaller shadow economies or if having a smaller black market results in you being measured as being rich. Does the smaller shadow economy just mean that more economic activity is in the measured sectors of the economy, and thus you are considered as being rich, while the overall size of an economy, black plus white markets, could be similar between rich and poor countries. One wonders what the true size of some Latin American countries GDP would be if both black and white markets were measured correctly and countered.