The Shadow Economy and its Impact on Sustainable Development in Iraq

The informal private sector, also known as the unregulated economy or shadow economy, poses a significant challenge to the economies of both developed and developing countries. When its size increases substantially, it poses a serious threat to the present and future rights of society as a whole. Therefore, the damage it inflicts on the economy due to its lack of official registration, taxation, legal accountability, and other controls that govern its operations or regulate it in a way that does not negatively impact sustainable development cannot be ignored.
Although the informal sector exists in all centralized and decentralized systems, it is more prevalent in developing countries due to the imbalance in the economic, legal, and regulatory environment, and the resulting problems such as poverty and unemployment. This compels individuals to turn to the informal sector to ensure their survival. All of this has led to the sector's large size and its high contribution to the gross domestic product (GDP).
Iraq, as a developing country, suffers from the same problems as other developing countries, especially after 2003. As a result of the unregulated shift towards capitalism, the unregulated sector has grown to such an extent that it has become more dominant than the newly established organized sector, leading to the emergence of numerous problems that have begun to clearly and seriously affect the requirements of sustainability. However, this issue has remained far from the attention of the state and the institutions concerned in the field of research and studies, for the simple reason that this sector contributes, even if only temporarily, to addressing serious problems in Iraqi society.