The Correlation between Shadow Economies and Economic Strength in Oceania

Aug 30, 2017
Scatter plot of shadow economies and GDP

In Oceania, the correlation between economic strength and the strength of the shadow economy is pretty strong.  Every country studied on the continent - excluding Papua New Guinea - has a shadow economy that takes up at most one-third of its overall economy.


  • The correlation coefficient between per capita Gross Domestic Product (GDP) in Purchasing Power Parity (PPP) and shadow economies in Oceania is -0.96.
  • As economic strength increases in Oceania, the shadow economy decreases.
  • Just like in Europe and Asia, the country with the smallest shadow economy (New Zealand) does not have the largest per capita GDP PPP of the Oceanic nations studied by the Global Foundation for Integrity (GFI).
  • Australia has the largest per capita GDP PPP, yet it only has the second smallest shadow activity as a percentage of its overall economy.
  • Papua New Guinea has the largest shadow economy and the smallest per capita GDP PPP of the Oceanic nations studied by GFI.


  • As always, correlation does not imply causation.
  • American Samoa, Cook Islands, French Polynesia, Guam, Kiribati, Marshall Islands, Micronesia, Nauru, New Caledonia, Niue, Norfolk Island, Northern Mariana Islands, Palau, Pitcairn, Samoa, Solomon Islands, Tokelau, Tonga, Tuvalu, Vanuatu, and Wallis and Futuna were missing data.
  • The GDP data is from 2016 while the shadow economy data is the average from 1999-2006.


There are too few countries in the study but we do see that the economic strength of Australia and New Zealand is several multiples of the smaller nations and the shadow economy of the two states is considerably smaller than Fiji's and Papua New Guinea's.

Papua New Guinea is the only country whose shadow economy takes up over one-third of its overall economy.  Fiji is not far behind.

Both Australia and New Zealand have shadow economies that take up less than 15 percent of their overall economies.

Country Codes

NZNew Zealand
PGPapua New Guinea


Schneider, Friedrich, Andreas Buehn, and Claudio E. Montenegro.  2010.  "Shadow Economies All over the World: New Estimates for 162 Countries from 1999 to 2007."  The World Bank Development Research Group.

"Report for Selected Country Groups and Subjects (PPP Valuation of Country GDP)."  International Monetary Fund.

Filed under: Correlations