Whether shadow economy threats economic growth?

One of the main concerns that many countries of the world are encountering, is some economic activities which are usually hidden from official view. These activities could effect deviation from correct position and prescribe incorrect polices.In this study, after short review on concept and different distances of shadow economy to try that investigated effects of shadow economy volume on economic growth for 1981-2007 by vector error correction model (VECM). Shadow economy was estimated by fuzzy logic method. Results indicated that in Iran, with increase of one percentage size of shadow economy, 0/38 percentage diminished economic growth.