HIDDEN ECONOMY

Abstract

This article examines the concept of the hidden economy, its impact on economic development, and the challenges it poses to both developed and developing countries. The study analyzes the relationship between the shadow economy and institutional quality, emphasizing the role of public administration efficiency, digitization, and regulatory systems in reducing informal economic activities. Particular attention is given to international experience and the reforms implemented in Uzbekistan to combat the hidden economy. These reforms include the promotion of cashless transactions, the introduction of sustainability ratings for business entities, digital reporting tools such as a Telegram bot, product labeling systems, and international cooperation initiatives. The article concludes that the integration of digital technologies and financial transparency mechanisms plays a crucial role in formalizing the informal sector, increasing tax revenues, and ensuring sustainable economic growth.