Doing Business Indicators Reform: An Effective Factor on the Reduction of Hidden Economy and the Development of Formal Sector

The expansion of hidden economy as well as increasing its ratio in economy prepares a good way for economic corruption. On the other hand, it can be said that hidden economy is an effect of economic corruption. According to serious consequences of the expansion of hidden economy for the trend of economic development, the importance of removing effective factors on the expansion of hidden economy and the importance of finding solutions to develop formal economy are emphasized.The paper emphasizes doing business indicators as an indicator of all effective factors on enterprises activity in formal sector and it discusses the relationship between ten doing business indicators reform and underground and hidden economies to use different solutions to reform each of them as a serious solution to combat economic corruptions according to their priorities.Results of studies show that reforming all ten doing business indicators influence the evelopment of formal sector and the reduction of hidden economy directly and indirectly. Among ten doing business indicators, three indicators play major role in the reduction of hidden economy such as tax payment, employment, and foreign trade indicators. As they influence the reduction of hidden economy directly and according to studies, in doing business they are more effective on underground economy than others. Consequently, the amendment of tax payment, employment, and foreign trade acts are good solutions to reduce hidden economy.