SECOND TEST AT THE ECONOMY OF EXTERNAL RELATIONS OF THE R.

MOLDOVA
May 4, 2020. Student DOINA BEGA
Group EMREI-181

VARIANT 5

Subject no. 1: Please explain in what consists the fallacy / illusion regarding the post-
industrial phase of the R. Moldova’s economy and its possible solutions.

 An extremely complicated process, formed of such elements as development, perfection,

and modernization, is taking place in the post-industrial society, which has attained
unheard of performances in the development of the civilization. The tendency to a higher
perfection is the imperative of the time and of the development of the modern society.

 The relationship between manufacturing and services changes in a postindustrial society.

Moving to a service-based economy means that manufacturing must occur elsewhere and
is often outsourced to industrial economies. While this gives the illusion that the
postindustrial society is merely service-based, it is still highly connected with those
industrial economies to which the manufacturing is outsourced.

Subject no. 2: Please show at least 3 social forces raising the size of the underground
sector in the poor countries.

1. Taxes affect labour-leisure choices, and also stimulate labour supply in the shadow
economy, the distortion of the overall tax burden is a major concern for economists. The
bigger the difference between the total cost of labour in the official economy and the
after-tax earnings (from work), the greater is the incentive to avoid this difference and
to work in the shadow economy. Since this difference depends broadly on the level and
increase of the social security burden/payments and of the overall tax burden, they are
key features of the existence and the increase of the shadow economy.

2. Wage rates in the official economy also play a role in raising the size of the underground
sector in poor countries.

3. Labor market regulations, in particular, have a major effect on employers' costs and
workers' incentives. In many OECD countries, high total labor costs are an important
cause of high official rates of unemployment, and, simultaneously, of expansion in the
shadow economy, which employs many people who are officially unemployed.
4. Government regulations can substantially raise the cost of labor to firms in the
official economy. Such regulations include license requirements, labor market
regulations, trade barriers, and labor restrictions for foreigners. Employers in
the official economy who shift most of the associated additional costs on to
their employees give them a strong incentive to move into the shadow economy