November 20, 2014 Print

Hard economic times and the high taxes that ensued have driven more people than ever into the shadow economy, which refers to trade of goods or services in cash to evade taxes.

The Lithuanian Free Market Institute (LFMI) estimates that before the financial crisis, the shadow economy accounted for 18 percent of Lithuania’s GDP; today it makes up 25 percent of all economic activity. LFMI is dedicated to researching the incentives that drive trade underground, and addressing the policies that can be changed to create more equal competition.

Thanks to its efforts, media coverage of the shadow economy is steadily increasing throughout all the Baltic States. In 2014, LFMI met with the President of Lithuania on Anti-Corruption Day to discuss the problem and what policy measures could be reexamined to lessen incentives to deal surreptitiously.

LFMI won the 2014 Templeton Freedom Award for its Municipal Performance Index.

Read more here about LFMI’s efforts to diminish the shadow economy.