INFLUENCE OF SHADOWING OF ECONOMY ON INDICATORS OF SOCIAL DEVELOPMENT OF THE COUNTRY

One of the biggest threats to the sustainable functioning of the economy, which negatively affects the indicators of its economic and social development is the shadowing of the economy. The growth of shadow financial transactions causes changes in household incomes, increasing inequality in the levels of their material well-being, deteriorating living standards, and so on. With the annual decline in the welfare of the population, increasing requirements for the quality of social services provided by the state, it is becoming increasingly important to identify the factors that have the greatest impact on the indicators of social development of the country. The purpose of this paper is to substantiate the causal links between the level of shadowing of the economy and indicators of social development of the country, to determine the most sensitive to the growth of shadow financial transactions indicators. The article analyzes the impact of the shadow economy and indicators of social development of the country, proves the negative impact of shadow financial transactions on the level of material well-being of the population. Based on a comparative analysis of the dynamics of changes in the level of shadowing and the Human Development Index of individual countries, the Gini coefficient, the share of the population in a difficult financial situation, the share of the population in poverty in some countries, the causal relationship between these indicators is proved. The paper concludes that a prerequisite for the development of the shadow sector of the economy is the low level of average wages in the country, which encourages the population to seek alternative (often shadow) sources of income. The expediency of reducing the level of shadowing of the economy as a driver of increasing the level of social development of the country is substantiated. It is proved that at the present stage of economic development of most countries the shadowing of the economy on the one hand causes a decrease in poverty (by improving the material well-being of the population), deteriorating living conditions, easier access to knowledge, and on the other - contributes to the gap in income of the richest and poorest group of the population.