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  The blackmarket is the illegal exchange of goods at a free-market price when the product price is set lower by law or when exchange is legally forbidden. These transactions for goods and services are not declared to the tax man and therefore do not show up in the figures for gross national product (GNP). The black economy may thus mean that the country is actually richer than the figures suggest. One way of measuring the size of the black economy is by taking the difference between gross national product and gross national expenditure. As undeclared money is spent, it should turn up in the expenditure figures. The only snag is that this method misses money hidden away by individuals or companies, for instance in offshore tax havens.

Studies of the black economy suggest that in the UK in the mid-1980s it was worth perhaps 4-5% of GNP and in the US roughly the same. In Italy, by contrast, it could represent as much as a quarter of GNP in the same period. Optimists argue that black work keeps the unemployed off the breadline. However, it seems more likely that black work is performed by those who are already in employment and so possess the necessary tools, equipment and contacts. A more culturally sensitive term being substituted for black market is the term shadow economy. TF



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