Corruption fuels shadow economy growth, hinders economic progress in post-communist states.
The article examines how corruption affects the size of the shadow economy and economic growth in the Czech Republic. By using a complex economic model, the researchers found that corruption leads to an increase in the shadow economy, but also negatively impacts capital accumulation and the labor force. Additionally, corruption has a more harmful effect on tax evasion-prone sectors of the economy. These findings can be applied to other post-communist EU countries facing similar challenges.