DO R&D AND DIGITALIZATION AFFECT SHADOW ECONOMY IN UZBEKISTAN?

Abstract

The purpose of this article is to determine the impact of the economy digitalization on reduction of the share of the shadow sector as a whole. This study is focused on the analysis of the impact of spending on research and development and the prevalence and availability of the Internet among the population on the share of the shadow economy as a whole; and the impact of the availability of Internet and personal computers in firms on the percentage of the shadow labor force. Analysis and synthesis of diverse views and generalization of statistics help to conclude concerning the benefits and risks of digitalization for the shadow economy. Macroeconomic data for the period 2000-2020 from the open data of the World Bank, calculated by the Multiple Indices Multiple Causes model for Uzbekistan and Ordinary Least Squares regression model are used to discover both positive and negative effects digitalization proxies on shadow economy. Statistic data for the Informal employment (2015-2020) is taken from the State Committee of the Republic of Uzbekistan on Statistics. Results allow to distinguish possible legal, regulatory and technical recommendations to reduce shadow sector. According to the estimation results, there is a negative relationship between the shadow sector and the country's research and development expenditure amount and the number of personal computers negatively correlated with the share of informal employment, meanwhile, an increase in internet availability both for individuals and firms encourages further deeper research into this problem.