Precise Estimates of the Unrecorded Economy

Abstract

Informal economy in Pakistan is the backbone of the economy. However, the problem is that we do not know how big it is due to non-availability of the precise estimates of unrecorded1 economy. Precise estimates of the unrecorded economy would help policy-makers to make better macroeconomic policies. If unrecorded economy becomes part of the recorded economy government can seek revenues from it and rest of the sectors may have to take lesser burden of taxes. This would be a win-win situation for the government and for those sectors that are part of the documented system. In return, by becoming part of the documented economic system the undocumented sector can enjoy all those benefits and incentives that are available to the formal sector.