The Syrian Shadow Economy: Size, Causes and Effects

Abstract

Since 2005, Syria has chosen to shift from a model of centralized planning to a social market economy, based on a policy of openness and flexibility for the mechanisms of the private sector and the encouragement to invest in economic activities. Because of this transitional stage, the phenomenon of the shadow economy grew worse and penetrated formal and informal networks as a result of the weak systems of oversight, accountability, and protection, and the limited possibilities of the previous macroeconomy and lack of expertise in functioning in areas of investment, employment, and public finance. This gap helped the emergence of the present crisis which reflects popular frustration and resentment at the growth of opportunistic groups that have benefited from the gaps to accumulate wealth from various sources, relying on activities of the shadow economy removed from oversight and transparency and in cooperation and complicity with agents of the governmental sector.