Transformations  in
Business & Economics

BLACK MARKETS IN TRANSITION. THE CASE OF EASTERN EUROPEAN COUNTRIES
Gabriel Claudiu Mursa, Vasile Isan, Mihaela Ifrim

ABSTRACT.Black market was one of the most important phenomena that accompanied the transformation of Eastern European economies in the last quarter century. The fundamental purpose of this article is to demonstrate that the transition from socialism to capitalism in these countries has strongly changed the structure of transactions made through black market. Until 1989, the main role of the black market was to provide basic goods, because of the failure of planners to allocate scarce resources. The analysis of statistical data shows that the transformations of these economic systems have generated new causes of the black market: excessive taxation, low confidence in the new institutions, corruption and low tax morale. Our analysis shows that in the last decade, as the population confidence in political institutions has began to grow, the share of informal activities in GDP has began to decline .

KEYWORDS: black markets, socialism, central plan, regulation, fiscal pressure, tax morale, Eastern European countries.

JEL classification: E26, H2, O17, O52.