1 Odesa National Polytechnic University (ONPU)
- Type
- Applied Research
- Status
- Ongoing · Paper 3/3 · 2026–ongoing
- Tool
- GRI Shadow Economy Tab → API → GitHub
This research series investigates the joint effects of fiscal policy (tax burden) and state digitalization (informatization) on the dynamics of Ukraine’s shadow economy. Using scenario analysis and game-theoretic frameworks accessible to second-year economic cybernetics students, we model three plausible futures for Ukraine’s informal sector under varying tax and digitalization regimes. The series synthesizes World Bank governance indicators, IMF shadow economy estimates, and Ukrainian State Statistics Service data with the Diia digital governance platform metrics, producing actionable policy recommendations for shadow economy reduction during wartime reconstruction and EU accession preparation.
Idea and Motivation
Ukraine’s shadow economy remains among the largest in Europe, estimated at 30–45% of GDP. Two forces push in opposite directions: tax burden drives economic activity underground, while digitalization of state services — the Diia platform, e-invoicing, cashless payments — increases transparency and raises the cost of informality. No existing study models their joint interaction using accessible quantitative methods suitable for economic cybernetics curricula.
This gap matters for two reasons. First, Ukraine’s EU accession process requires fiscal convergence, including measurable reduction of the informal sector. Second, wartime reconstruction will depend on tax revenue mobilization — understanding how digitalization can substitute for punitive taxation in reducing shadow activity is directly policy-relevant.
Goal
Produce a 3-paper series that (1) maps the problem landscape with descriptive statistics covering 2015–2025, (2) models three scenarios using game theory and scenario analysis with payoff matrices for government vs. informal-sector actors, and (3) derives policy recommendations with a decision framework integrating comparative analysis of Estonia, Georgia, and Poland — three post-socialist economies that have achieved significant shadow economy reductions through different policy mixes.
Scope
The series covers 3 papers across three complementary phases:
| Paper | Focus Area | Key Topics |
|---|---|---|
| 1 | Problem Landscape | Problem statement, literature review (Schneider, Medina), descriptive statistics on tax-to-GDP ratio and shadow economy estimates 2015–2025, Diia platform adoption metrics |
| 2 | Scenario Modelling | Three-scenario analysis (high tax/low digital, balanced, low tax/high digital), game-theoretic payoff matrices for government vs. informal sector, Nash equilibrium identification |
| 3 | Policy and Comparison | Comparative analysis (Estonia, Georgia, Poland), policy recommendations, integration with geopolitical risk monitoring, EU accession fiscal requirements, projections to 2030 |
Focus
The primary analytical focus spans six areas: tax-to-GDP ratio dynamics in Ukraine and peer economies; shadow economy estimation methods following the Schneider–Medina MIMIC approach; Ukraine’s Diia digital governance platform as a transparency mechanism; game theory applied to government–informal sector interaction; scenario analysis methodology for policy evaluation; and EU accession fiscal requirements as external constraints on Ukrainian fiscal policy.
The methodological approach is deliberately accessible — designed for second-year economic cybernetics students while remaining analytically rigorous. Game-theoretic models use simplified 2×2 and 3×3 payoff matrices rather than continuous strategy spaces, making the framework reproducible in educational settings.
Limitations
Scientific Value
The series makes four contributions. First, it provides the first joint analysis of tax burden and informatization effects on the Ukrainian shadow economy — existing studies treat these factors in isolation. Second, it develops an accessible game-theoretic framework suitable for economic cybernetics education, bridging the gap between advanced research methods and undergraduate curricula. Third, it produces scenario projections to 2030 under varying policy regimes, providing a structured basis for policy evaluation. Fourth, the work is directly policy-relevant during Ukraine’s EU accession preparation, where fiscal transparency metrics are a core assessment criterion.
Resources
- Geopolitical Risk Intelligence — Shadow Economy Tab→
- Stabilarity API Gateway (/v1/geo-risk/)→
- GitHub Repository→
Status
Ongoing. All 3 papers published. Series complete.
Published Articles
Contribution Opportunities
Researchers and students wishing to contribute are encouraged to engage in the following directions:
- Data collection: Compile and validate time-series data on Ukrainian tax-to-GDP ratios, Diia adoption metrics, and shadow economy estimates from multiple methodological sources.
- Comparative cases: Extend the comparative analysis beyond Estonia, Georgia, and Poland to other post-socialist economies with documented digitalization-driven fiscal reforms.
- Game-theoretic extensions: Develop richer strategy spaces (continuous or multi-stage games) building on the simplified payoff matrices presented in Paper 2.
- Policy engagement: Connect findings to ongoing EU accession working groups and Ukrainian fiscal reform initiatives.
- Tool development: Contribute to the Shadow Economy tab in the Geopolitical Risk Intelligence tool on the Stabilarity Research Hub.