Size of Iraq’s Shadow Economy

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iraq.gifOne brave soul attempts to estimate the size of the informal economy in Iraq;

“Most importantly, the analysis confirmed that Iraq’s informal economy was around 35% of GDP in the year 2000. Substituting Iraq’s values for the three independent variables in the regression equation resulted in a prediction of 35.86% of GNP for the size of the country’s shadow economy The high standardized coefficient associated with control of corruption (0.842) as opposed to 0.193 and 0.206 for Greater Middle East member country and banking and finance development respectively suggests that this is the dominant element in explaining the relative size of the informal economy across countries.

Finally, Schneider and Enste have calculated the likely shadow labor force in a group of developing countries for 1998. They present values of the shadow economy labor force in absolute terms, and as a percentage of the official labor force under the assumption that the shadow economy is rural areas is at leas as high as in the cities (where the original surveys were taken). While Iraq does not appear in their sample, there is a close relationship between the size of the shadow economy and its associated labor force. Using the 35 percent of GNP figure for Iraq ’s shadow economy derived above produces an estimate of a shadow labor force in Iraq at this time (1998) of 68.3 percent of the total labor force. This is equivalent to a shadow labor force of 32.2 percent of the total population.”

Given that the data on the Iraqi economy is scant it’s probably anybody’s guess. As the medium term National Development Strategy published last year suggest there is widespread unemployment, in particular among young men whose unemployment rate reaches an astonishing 37%. The employment situation is complicated by the fact that Iraq has an estimated 192 State-owned enterprises that together employ 500,000 people.

I was surprised to learn that Iraqi budget includes war reparations of $1 billion in 2005, $1.3 billion in 2006 and $1.46 billion in 2007. According to a UN Security Council Resolution, war reparations should constitute 5% of the revenues from oil exports. Another Iraqi is worried that mediocre goods of all kinds are flooding Iraq.

- Links to Iraqi Government Agencies
- Doing Business in Iraq
- Iraq Living Conditions Survey 2004
- More news from Iraq

1 Comment

you no what ira rulall other countries


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This page contains a single entry by Paul published on May 9, 2006 12:39 AM.

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