Influence of the shadow economy of the transport services market on the economic development of regions

arising from illegal activities of carriers: not paying taxes to state institutions, limited possibilities of budget financing of development programs, an increase in the level of corruption, deformation of competitive relations on the market due to the higher profitability of illegal enterprises. Therefore, it can be assumed that increasing the level of the shadow economy has a significant impact on the economic indicators of regional development.

4. Influence of the shadow economy of the transport services market on the economic development of regions

The results of calculating the shadow economy coefficient of the transport services market using the method of “unprofitable enterprises” according to the formula (1) showed a decrease in the level of the shadow economy in most regions of Ukraine in 2019 compared to 2013 (Fig. 1). The exception was the city of Kyiv, where the shadow economy index increased to 31.87 due to a significant increase in corporate losses: in 2013, profits exceeded losses by 1.1 times, and in 2019 losses exceeded profits by 1.3 times, and compared to 2013 – increased by 10.2 times.

The impact of the shadow sector of transport services… 109

The lowest scale of the shadow economy of transport services is in the Cherkassy region (12.01%). In 2019, the ratio of unprofitable to profitable en-terprises was 0.3 (0.5 in 2013), and the ratio of losses to profits of enen-terprises decreased almost seven times (from 2.7 in 2013 to 0.35 in 2019). Moreover, in the Cherkassy region, gross value added increased 2.6 times during the period under investigation.

Summing up, we note that according to the results obtained, the average shadow economy coefficient of the transport services market in 2019 in Ukraine amounted 17.4% of the gross value added generated in this sector (46.1 billion UAH), i.e. it was lower by 5.8 points percentage (pp) compared to 2013 (23.2%) and by 2.3 pp lower than in the previous year. In the analyzed period, most regions and the country’s average had a decline in the shadow economy of the transport services market.

The quantitative assessment of the impact of the shadow economy on in-dividual indicators of economic development was made on the basis of panel data regression analysis by regions of Ukraine in 2013-2019 using the computer software Statistica 7.0.

According to the results of the assessment, the value of the correlation coef-ficient (R = 0.63) confirms a sufcoef-ficient relationship between income per capita and the shadow economy coefficient of income per capita to the change in shadow sector and the share of profitable enterprises in the total number of transport enterprises (Table 1). The ratio of capital expenditure to gross value added of transport services (capital invest / GVA trans serv) in the research period had

Fig. 1. The dynamics of the shadow economy of the transport services market in the Ukraine’s regions in 2013 and 2019

Source: calculated according to the data: Rehiony Ukrayiny (2016, 2019); Valovyi rehionalnyi produkt u 2017 r. (2019); Valovyi rehionalnyi produkt u 2019 r. (2020)

7 The results of calculating the shadow economy coefficient of the transport services market using the method of “unprofitable enterprises” according to the formula (1) showed a decrease in the level of the shadow economy in most regions of Ukraine in 2019 compared to 2013 (Fig. 1). The exception was the city of Kyiv, where the shadow economy index increased to 31.87 due to a significant increase in corporate losses: in 2013, profits exceeded losses by 1.1 times, and in 2019 losses exceeded profits by 1.3 times, and compared to 2013 – increased by 10.2 times.

Fig. 1. The dynamics of the shadow economy of the transport services market in the Ukraine’s regions in 2013 and 2019

Source: calculated according to the data: Rehiony Ukrayiny (2016, 2019); Valovyi rehionalnyi produkt u 2017 r. (2019); Valovyi rehionalnyi produkt u 2019 r. (2020)

The lowest scale of the shadow economy of transport services is in the Cherkassy region (12.01%). In 2019, the ratio of unprofitable to profitable enterprises was 0.3 (0.5 in 2013), and the ratio of losses to profits of enterprises decreased almost seven times (from 2.7 in 2013 to 0.35 in 2019). Moreover, in the Cherkassy region, gross value added increased 2.6 times during the period under investigation.

Summing up, we note that according to the results obtained, the average shadow economy coefficient of the transport services market in 2019 in Ukraine amounted 17.4% of the gross value added generated in this sector (46.1 billion UAH), i.e. it was lower by 5.8 points percentage (pp) compared to 2013 (23.2%) and by 2.3 pp lower than in the previous year. In the analyzed period, most regions and the country's average had a decline in the shadow economy of the transport services market.

15,15

a positive impact on the dependent variable. There is a weak direct relationship (R = 0.49) between the consumer price index and the shadow sector and the share of profitable enterprises in the total number of transport service enterprises.

The results obtained are characterized by such negative manifestations of the shadow market as an increase in unsettled cash flowing into the legal sector and an increase in transport costs due to the underestimation of the profitability of services. The direct impact of increasing the share of profitable enterprises on the consumer price index confirms the share of profitable enterprises in creating a gray market for transport services due to undeclared full income.

According to our calculations, a weak correlation was found (R = 0.48) between the share of small enterprises in the total number of enterprises in the region and the indicators characterizing the transport services market. As can be seen from Table 1, increasing the shadow economy ratio by 1% leads to an

Table 1. The results of the assessment of the impact of transport services on the economic development of Ukraine’s regions

Factor features Dependent variable

Income

per capita Consumer

price index Small business Unprofitable enterprises

R² 0.399 0.239 0.234 0.735

*** – statistical error rate (p-level) ≤ 10%;

*** – statistical error rate (p-level) ≤ 5%;

*** – statistical error rate (p-level) ≤ 1%.

Source: calculated according to the data: Rehiony Ukrayiny (2016, 2019); Valovyi rehionalnyi produkt u 2017 r. (2019); Valovyi rehionalnyi produkt u 2019 r. (2020).

The impact of the shadow sector of transport services… 111 increase in the share of small enterprises by 0.005% with the remaining condi-tions being equal, because the existing imperfect institutional mechanisms make this segment of the transport services market attractive for small enterprises (for example, minibuses that mainly operate as small enterprises). The 10% increase in the share of profitable enterprises in the total number of enterprises providing transport services contributes to the increase in the share of small enterprises in the region by 0.32%, which also confirms the attractiveness of this activity for entrepreneurs working legally.

The regression model showed a strong negative dependence (R = 0.86) of the share of unprofitable enterprises in the total number of enterprises in the region on the share of profitable enterprises in the total number of transport service enterprises and on the share of transport services in the total gross value added in the region. The estimation results confirmed the direct impact of the share of transport services in the region’s total output on the share of unprofitable enterprises in the total number of enterprises in the region.

The increase in the share of profitable enterprises in the total number of trans-port service enterprises contributes to the reduction of the share of unprofitable enterprises in the total number of enterprises in the region. Increasing the share of transport services in the total gross value added in the region also reduces the share of unprofitable enterprises in the total number of enterprises in the region.

These estimation results indirectly confirm the impact of the shadow economy of transport services on the economic development of regions by changing the profitability of economic entities. At the same time, it is worth noting that the increase in the share of transport services in the region’s total output increases the share of unprofitable enterprises in the total number of enterprises in the re-gion, which indicates that some of the income of enterprises providing transport services is hidden.

According to the obtained panel data regression results, the impact of the shadow economy coefficient of transport services on changes in gross regional product per capita (R² = 0.19), as well as on the growth rate of gross regional product (R² = 0.17), in 2013-2019 is not statistically significant.

The weak impact of the shadow economy of transport services on the basic indicators of the economic development of Ukrainian regions can be explained first by the small scale of the shadow economy of the transport services market in relation to the gross regional product (according to our calculations, 2.1%

or 98 billion UAH in total in Ukraine), which is mainly generated by unsettled cash, and income from unlicensed activities of enterprises. For comparison, the annual amount of funds withdrawn from the Ukrainian economy to “tax havens”

is approximately 320 billion UAH, and through “shadow imports” or smuggling – up to UAH 230 billion (Bukatiuk, 2017). Another reason for recovering such results is the hidden schemes of generating illegal income and the impossibility

of accurately scaling the scale of the strife to run the transport services with the help of the existing method.