The period after World War II was marked by an upsurge in migration from the rural to urban areas in both developed and developing countries. During this period, colonies of Africa, Asia, and Central America achieved independence during the 1950s and1960s. Together, these factors contributed to the emergence of what is known as the shadow economy. Shadow economy is an active component of the majority, if not all, of the world’s economies, though its size and measurements appears to vary considerably among countries. Researchers argued that underground economy should be included in GDP to the extent possible, given the obviously incomplete picture generated by ignoring such activity. The growing concerns about shadow economy have led many economists to the challenging and difficult task of its measurement and size, to trace back its main causes, and to analyze its interactions with the official economies. It seems unlikely that robust estimators can be developed without a clear understanding of both the underlying economic theory describing how shadow economies come about and what drives the level of activity in each component sector of any economy
Keywords: Economy, Measuring Shadow, Policy Makers, Virtuous
