"The shadow economy (or “second economy”, “underground economy”, “informal sector”, “informal economy”, etc.) is present in more or less every country in the world. It has already been present for a long period of time in Montenegro and Serbia, and has been strengthened by the actual economic and social crisis and the processes of transition. During this time of crisis, symbolised by massive unemployment and forced leave, a drastic fall in living standards and very modest economic activities within the so-called regular enterprise sector, the shadow economy has played a very important role as a unique social shock absorber, providing protection from even greater levels of poverty. On the other hand, employees in the shadow economy are deprived of basic levels of security and they are effectively invisible. For the state, the shadow economy reduces tax income and is proof of a disrespect for juridical regulations and norms. In addition, the shadow economy can adversely affect the management of economic development, by distorting the picture of the real economic and social situation. The shadow economy simultaneously both increases the divisions in an already dramatically polarised society, as well as alleviating, or at least decelerating, the causes of the impoverishment of the urban classes. In this article, we provide some basic information about the operation of the shadow economy in the Federal Republic of Yugoslavia."

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