The War on the Shadow Economy in Southeast Asia: A New Contribution from Inclusion of LGBT People

The inclusion of lesbian, gay, bisexual, and transgender (LGBT) individuals can have significant implications for a country's economy. This paper analyzes the effect of social inclusion of LGBT, as measured by the LGBT Global Acceptance Index (GAI), on the shadow economy size in Southeast Asia countries. To accomplish this objective, we collect data from various sources such as World Development Indicators, World Governance Indicators of the World Bank, and the Index of Economic Freedom of the Heritage Foundation over the period 2000–2017. After collecting data, we employ the Bayesian regression approach to discover the relationship between LGBT inclusion and underground activities. The result shows that an increase in the LGBT GAI will reduce the shadow economy of countries in Southeast Asia. This finding helps better understand how LGBT people thoroughly enjoy their human rights, and public attitudes towards them will contribute to the country's economic development by limiting participation in shadow economy activities. We also suggest a potential mechanism and practical implications regarding this negative relationship between LGBT inclusion and the size of the shadow economy.