University of Sarajevo International Conference on regional market, development of statistics and investment opportunities Ph. D. Sahrudin Sarajčić University of Sarajevo Sarajevo, 6.- 8.11.2017.

Analysis of the role of unregulated economy in the national accounts system-SNA   - -In most countries there are certain economic activities in which to some extent bypass the state regulation system (the so-called unregulated economy), where we meet with activities that are not legally registered, or that have implications on the GDP. -In this regard, information on the level of total GDP without inclusion of unregulated economy would not give the complete and reliable picture of the level of development of economies of certain countries. - According to international recommendations of the United Nations, it can be said that the statistical agencies in Bosnia and Herzegovina following the recommendations of the UN and European statistics, in the calculation of the official GDP include segments which are related to the so-called unregulated economy, and "unnoticed economy" (non-observed economy).

Analysis of the role of unregulated economy in the national accounts system-SNA In general, data on the level of total GDP without included unregulated economy would lead to securing the misleading picture of the level of development of country's economy. A prerequisite for the implementation of economic analysis is the existence of high-quality and complete official statistical information. Analysis of economic developments that have been made on the basis of incomplete information can lead to making wrong decisions on the necessary economic policy measures. DEFINITION OF GREY ECONOMY Phenomenon of the underground economy in the last three decades takes up more and more attention among economists, especially after you determine that this phenomenon is not unique to developing countries and countries in transition, but also for many developed countries. However, because of the heterogeneousness of the activities which are included in scientific and professional literature, different names are encountered, such as: -hidden economy in the shadows -underground, -paralel, -unregistered, -unofficial, -informal economy, etc., where it is not certain whether they mean the same phenomenon and, if not, what are their relationships.

Analysis of the role of unregulated economy in the national accounts system-SNA In this paper we will use the terms "black" and "unregulated economy" as synonyms. More recently, the most complete and accurate economic interpretation of unregulated economy gave Schneider and Enste: "Unregulated (gray) economy includes unreported income from the production of legal goods and services, which are paid or replaced by trade, and that would be taxable to the reported state (tax) authorities "(Schneider, F., Enste, D., 2000: 78-79). So, it is a permissible forms of economic activities, which are verified, but are not formally registered. Illegal economic activities (such as the production and distribution of drugs), due to the fact that they are contrary to the law and that it is therefore impossible to register or legalize and tax, economists usually do not include in the definition of the informal economy. It also does not take into consideration nor production for own consumption within households, since these activities are not subject to mandatory state regulation, which is why their identification and calculation is difficult. -Generally, all applied scientific methods can be classified into three major groups: -Direct, -Indirect and -model methods of calculation of the gray economy.

Analysis of the role of unregulated economy in the national accounts system-SNA Direct methods are essentially microeconomic and are based on the results of the survey and tax statistics. Although the survey sample provided for the assessment of gray economy is the most appropriate data collection, as they provide detailed information on the structure of the informal economy, as well as used manpower in this sector, they usually require significant financial and human resources, which is its major drawback. Indirect methods are macroeconomic and assess the extent of the shadow economy over the traces it leaves in the official statistics. They can be further classified into three groups: - Methods of inconsistencies in the system of national accounts which assume that, according to the rules of social accounting, GDP calculated by expenditure approach (the sum of final consumption) must be equal to the GDP calculated according to the income approach (the sum of total income) and that the difference can be interpreted as the sum of the activities in the unregulated economy.

Analysis of the role of unregulated economy in the national accounts system-SNA The difference between revenues and expenditures, in addition to the macrolevel, can be analyzed on macrolevel. Realibilty of this method increased thanks to the Labor Force Survey, which regularly conducts statistical agenices, which provide the real situation on the labor market (Mikulic, D., 2000: 41; Frey, B., Pommerehne, W., 1984: 7); - Monetary methods are among the most used in empirical research. From the model approach of the calculation of the gray economy is mostly used MIMIC (Multiple Indicator - Multiple Cause), which, unlike previous methods, which concentrate on only one indicator as a measure of the volume of the gray economy, taking into account multiple causes that condition the existence and increase of gray economy, as well as its multiple indicators. This model uses access to factor analysis, which measures the gray economy as unobserved variable over time based on the presumed cause on one hand and measurable indicators of the gray economy on the other. Key indicators which point to the existence and development of the underground economy are the growth rate of real GDP and the cash circulating outside banks (monetary aggregate M1). This is, among other things, encouraged by international authorities - the European Commission, United Nations, World Bank, Organization for Economic Cooperation and Development and the International Monetary Fund to provide for the compulsory inclusion of unregulated economies in the system of national accounts and adopt a number of documents with the recommendations of the official statistical institutions which identified and accounted for different forms of the gray economy. This actually prevented that different countries use different methods of calculating the gray economy, which resulted to the disadvantages of these methods and transmitted to the National Accounts countries and disabled their analysis in an international context.

Analysis of the role of unregulated economy in the national accounts system-SNA REASONS FOR INCLUSION OF UNREGULATED ECONOMY -For national reports, primarily the economic policy makers, incomplete coverage of economic activity system of national accounts, would cause problems in understanding the status and trends of the economy. -projections of future macroeconomic trends would be unreliable, -the imbalance in the national accounts, STATISTICAL DEFINITION OF UNREGULATED ECONOMY In statistical terms there is a term that would be fully equivalent in economic term For unregulated informal economy. Official statistics uses the term "non-observed" and "unobserved economy" (non-observed economy). The starting point for defining and analysis of non-observed economy is given in the System of National Accounts (SNA) in 1993. In SNA in 2008 this term is defined.

Analysis of the role of unregulated economy in the national accounts system-SNA In this context, non-observed economy refers to the production activities not covered by the basic data sources used for compilation of national accounts. The reason for non-coverage may be what it comes to informal activity, and therefore is not included in the survey in the formal sector, or the manufacturer deliberately concealed the legal activities, but also because the activity is illegal. - In this context, five critical areas of non observed economy are identified : -hidden production activities (legal, but are deliberately concealed from public authorities for the following (SNA, 2008: 100): - to avoid paying income tax, value added tax or other taxes - to avoid the payment of social security contributions; - avoiding compliance with the prescribed standards of work in the formal sector (eg. the minimum wage, maximum working hours, health and safety, etc; -illegal production activities, (despite the obvious practical difficulties in collecting the data on illegal production recommended its inclusion in the system of national accounts. In this case, identified are two types of illegal production activities (SNA, 2008: 100): - production of goods and services which are sold, distribution or possession is prohibited by law (eg. production and sale of drugs, selling stolen goods, prostitution) – unformal production activities, - production within the household which it needs to own -and other activities omitted due to deficiencies in basic statistical program for data collection (OECD, 2002: 37).

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