The streets of Damascus have become prepared to be an umbrella for a new market. It is a market that lives in the underworld, the sidewalks, and in the shadow. It is multiplying very quickly. New “streets” are added, if counted, every minute or hour. Here the goods are diverse, and you cannot search in this market for anything. Goods you can't find, from clothing to electrical equipment parts, repair parts, vegetables, shoes, and much more.

There are many forms and the name is fixed:

The shadow economy is defined as the totality of activities that do not take place under the umbrella of the law and its transparency, and is divided into two parts. The first is called the crime economy or the black economy (selling forbidden goods, establishing fake companies, stealing antiquities, human trafficking, etc.), and the second is the informal economy. When dealing with it is prohibited and using the product is permitted (black market for selling some goods, unregistered shops and workshops, private lessons, taxi workers, etc.).

Unstable numbers:

Local reports are still unable to give a real figure on the volume of unidentified businesses hidden under the name of the shadow economy, and the statistics are still hovering around the threshold of 40%, while other reports issued by economists and researchers go further than 60%, and the relevant ministries do not. The type of economy is still justified by the absence of accurate statistics due to the conditions of war and the spread of various economic activities, starting from stalls to sewing and shoe repair workshops, through the profession of barbering, selling used clothes, and other jobs that citizens practiced in light of the lack of job opportunities and the high rate of unemployment.

According to the latest statistics published by a Syrian newspaper, the percentage of the shadow economy in Syria exceeds 70 percent. However, the accuracy of the statistical figures of the official data is absent, in addition to the difficulty of estimation resulting from the intertwining and overlapping of the activities of the formal sector with the informal, as most of those who work in the formal sector work Also in the shadow economy in order to improve income.

Therefore, there are many estimates based on observation and not on a scientific basis, most of which agree that the shadow economy in Syria is in a state of chronic and continuous swelling, and that the labor force that feeds it is the youth segment, due to the high rates of widespread unemployment among this segment.

Fertile environment for the emergence of warlords:

The spread of the shadow economy means a deficit in the state’s public resources, and this is later reflected in the quality of public services provided and good policy-making. In addition, the shadow economy has another type of criminal nature that is harmful to the economy and society, such as arms and antiquities trade, currency speculation, and others.

Which was the main reason for the emergence of warlords and crisis merchants who monopolized some goods and traded in them, such as food merchants. The role of international sanctions that contributed to the creation of a class of new wealthy people without a commercial history cannot be overlooked, who worked as intermediaries and brokers to secure some basic materials to circumvent the sanctions.

Between harmful and beneficial:

Opinions differ and contradict each other regarding the shadow economy. There are those who believe that regulating professions and businesses at the present time may cause “cutting off the livelihood” of many people who have sought refuge in informal areas or areas far from the eyes of observers in search of daily sustenance for themselves and their children.

Others consider the shadow economy to be supportive of the market, which is the basis of the economy, and it is necessary not to look at it as if it is in violation of the law, and to create an appropriate legal environment to embrace it away from the negative view, because every major merchant started with a small workshop, and the existence of a hidden economy at the present time protects society from illegal activities. A beloved woman whose owners search for their daily bread, regardless of the means.

On the other hand, many consider this type of economy as a cancer spreading throughout the Syrian economic body. This economy has a negative impact in the industrial and commercial field through its ability to secure goods at prices lower than the prices of regular goods. Despite all these negatives, the idea that the shadow economy has positives cannot be ignored. It works to reduce the problem of unemployment and works to ensure self-sufficiency in some materials and needs. It also leads to increasing income for individuals, especially in light of the decline in income levels in general.

Given that shadow economy activities of all kinds are not subject to official registration and are not statistically counted, they increase the rate of error in the official national accounts, to the point of distorting these accounts, which hinders the process of economic forecasting and the development of plans and strategies.

While the shadow economy contributes to providing job opportunities and absorbing part of the workforce, it distorts the features of the labor market and blurs its features.

On the other hand, the increase in the volume of shadow economy activities deprives public finances of the resources that were supposed to flow to it if these activities were carried out in the formal economy, in addition to high levels of corruption, which is a natural result of illegal activity that is hidden and out of sight. Censorship, and the resulting use of devious methods, paying bribes, offering in-kind gifts, and so on.

The most serious effects of this phenomenon are its contribution to increasing dropout rates from the educational system because it provides job opportunities for large segments of society, including children and youth, and what was mentioned is only a drop in a deep ocean full of long-term effects on the country’s economy.

In short, the reason for the mentality that leads the economy to the shadow is that the prohibitive mood controls the minds of economic officials and others, which amplifies the shadow economy, and when absolute powers are given to some parties in determining people’s behavior, corruption and bribery spread.

Rama Elba

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