Factors of Informal Economy Development in Central Asia and the Caucasus

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Panel regression identifies GDP per capita and financial development affecting informal economy in Central Asia, suggesting urgent state measures.

Higher GDP per capita significantly reduces the size of the informal economy, showing that income levels inversely affect this sector.
The analysis reveals that financial development has a strong negative impact on the informal economy, emphasizing the importance of digital finance.
Urbanization has dual effects, initially increasing informal employment but eventually reducing it in mature urban areas.
Trade openness positively correlates with the informal economy, highlighting risks of liberalization without proper digital customs infrastructure.

Tleppayev et al. (2025) studied this question.

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View Full Paper

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Panel regression identifies GDP per capita and financial development affecting informal economy in Central Asia, suggesting urgent state measures.

Higher GDP per capita significantly reduces the size of the informal economy, showing that income levels inversely affect this sector.
The analysis reveals that financial development has a strong negative impact on the informal economy, emphasizing the importance of digital finance.
Urbanization has dual effects, initially increasing informal employment but eventually reducing it in mature urban areas.
Trade openness positively correlates with the informal economy, highlighting risks of liberalization without proper digital customs infrastructure.

Tleppayev et al. (2025) studied this question.

View Full Paper

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