The hidden economy: A new view of remittances in the Arab world

Abstract

The hidden economy is set in place by the large-scale migration of labor in search of employment outside national boundaries. Remitted earnings, channeled largely through informal mechanisms, have generated a network of financial and economic relations that define the boundaries and characteristic features of the hidden economy. The hidden economy shapes many of the critical parameters of economic activity of the Middle East, such as exchange rates and the availability of foreign exchange. It is difficult to observe (or measure) working of this important phenomenon, since, to a large extent, it operates through unofficial, informal, or illegal transactions. Special emphasis is given to the cases of Sudan and Egypt to illustrate the operations of the hidden economy and to identify its agents and characteristic features.