The relationship between Malta's adoption of the euro and the underground economy

Abstract

The phenomenon of the underground economy is a fact of life. The wide array of terms used to describe this phenomenon very often tends to hide the distinctions between the economic and social phenomena that characterise the underground economy. One cannot derive correct conclusions as to why people engage in hidden activities without first referring to the psychological and sociological background of the country that is being taken into consideration. In the case of Malta, during the last four decades its economy has radically transformed itself; from a "closed economy" it changed to a more liberal one, recently becoming a full EU and Eurozone member operating under the single market rules. Undoubtedly, people's reactions to such transformations not only affected their way of living but it has also been reflected in the motives to engage in the underground economy. Thus, through micro-sociological and psychological and other behavioural theorems and basing itself on a qualitative research approach, this dissertation will assess whether the Euro adoption has either reinforced or has contributed for containing underground practices in Malta.