The Impact of the Shadow Economy on Sustainable Business Development in Russia and Latvia

Sustainable business development benefits not only the company itself, but also the state and the global economy as well. In this research paper, manifestations of the shadow economy and its impact on the total economic performance at Russia and Latvia have been revealed. The purpose of the study is to conduct the interview with business leaders about the shadow economy and its influence, then analyze the answers and examined by its implications. Additionally, set of recommendations are made for both countries, whose results should adequately reflect the main empirical findings on this theme available now. Apart from this, it is necessary to track the influence of Covid-19 on the economic development and the shadow economy coupled with other factors in order to make predictions for businesses and governments related to lowering of the shadow economy sector and boosting the economic development. An important condition for the fight against the shadow economy is the development of a business-friendly environment, as well as the availability of guarantees that it is more profitable for owners to conduct official activities than to go into the illegal market. In addition, the policy should take into account the need for the existence of certain incentives for organizations already involved in the shadow economy in order for them to reassure these illegal activities. This is especially important for Russia, since a significant part of citizens here depend on monetary transactions, and participation in the shadow economy seems to provide additional social guarantees.