Informal economy and the relationship between economic growth: The case of Turkey (1990-2019)

The main purpose of this employee is to estimate the size of the informal economy for the last thirty years in Turkey with the tax audit approach and to explain the relationship between economic growth and the informal economy theoretically, taking into account the gross domestic product data and the change in these data over the years. Although the concept of the informal economy began to find its place in the world literature in the 1950s, these activities could not be studied to the extent they deserve until the 1970s. Empirical conclusions have been reached that these activities, which are difficult to measure by official authorities, contribute to the economy of the country in the short term, but have harmful effects in the long term. The informal economy is a concept that cannot be calculated precisely and can be estimated with certain approaches, since it is the activities that take place without the knowledge of the state. There is no data on how close the estimation studies are to reality. In the study, the informal economy size of Turkey in the last thirty years has been estimated with the tax audit approach, and the relationship between the gross domestic product data and the informal economy and economic growth has been tried to be explained theoretically. The informal economy, which emerged as a result of activities carried out without the knowledge of the state, continues to exist in different sizes in all countries of the world. In general, although many estimation methods are used in the calculation, it is not possible to reach precise data about the size of the informal economy and its place in the country's economy. For this reason, the negative results of the informal economy's erosion of the registered economic growth data and tax-based treasury revenues of the countries are discussed in a narrow way with the taxpayer and tax dimension, and solution suggestions are given to reduce these uncertainties and to prevent the informal economy. Keywords: Inflation, Unemployment, Informal Economy, Tax Audit, Economic Growth.