Publication Details
Abstract
In Uzbekistan, the shadow economy remains a persistent and complex issue that hinders sustainable economic development and fiscal transparency. The shadow economy—comprising unregistered employment, undeclared income, and informal business operations—has historically emerged due to high tax burdens, bureaucratic complexity, limited access to finance, and insufficient trust in public institutions. This paper investigates the structural and behavioral causes of informality in Uzbekistan, alongside its socio-economic consequences, including reduced tax revenues, limited social protection coverage, and market inefficiencies. Particular attention is given to sectors such as agriculture, retail trade, and construction, which exhibit high levels of informality. The study reviews the government’s ongoing formalization strategies, including digital tax systems, cashless payment initiatives, regulatory reforms, and the promotion of entrepreneurship through simplified registration and licensing procedures. Comparative analysis with international best practices provides insight into how Uzbekistan can further reduce informality while supporting inclusive economic growth. The findings suggest that an integrated approach—combining regulatory simplification, improved institutional trust, and socio-economic incentives—is essential for transitioning towards a more transparent and resilient economy.