THE SHADOW SIDE OF REFORMS: INSTITUTIONAL CHALLENGES OF MODERNIZATION IN UZBEKISTAN

The shadow economy as a multi-layered socio-economic phenomenon is an activity carried out outside of official control and statistical accounting, including cycles of production, distribution and consumption. The article offers a rethought approach to its analysis, with an emphasis on the impact on macroeconomic processes and the specifics of its manifestation in Uzbekistan. The relevance of the study is due to the systemic nature of the shadow sector, which reduces tax revenues, distorts statistics and slows down growth, but also indicates policy inefficiency. Based on the speeches of President Shavkat Mirziyoyev (2024 ‒ 2025) and statistical data, the severity of the problem in construction, services and industry is highlighted, where the share of shadow activity exceeds 40 %. The methodology combines regression analysis, indirect indicators and qualitative methods. The literature review covers foreign concepts and domestic approaches, classifying the shadow economy into "white collar", "gray" and "black". The results show that in 2024 The unobserved economy of Uzbekistan accounted for 34.8 % of GDP (505.65 trillion soums), with a predominance in agriculture (63.6 %) and construction (41.3 %). Corruption (CPI 2024: 32 points) is a key driver, exacerbated by fiscal pressures, regulatory density, and low trust. The discussion suggests a syncretic approach that combines disciplines to develop strategies: tax optimization, digitalization, and increased control. The conclusion highlights the need to integrate the informal sector for sustainable growth, with the prospect of institutional reforms.