Cielito Habito (whose Inquirer column every civic-minded Filipino should read) has a piece on the underground economy. He describes how official statistics on GDP are capturing the informal sector. Briefly put, the method uses labor productivity figures in the formal sector, and applies it to informal sector employment captured in the labor surveys. Neat. The underground economy accounts for about 43% of GDP, it seems.
I have a couple of issues with this:
1. A "commodity" is something we are willing to pay for. How far are we going to extend the social recognition of a "commodity"? Suppose there is an underground outfit which provides consultancy services (for a fee) on bomb-making and placement. Of course your favorite terrorist organization is on their client list. Should their "service" be something the wider community should recognize as a commodity?
2. More pedestrian, but maybe more important: wouldn't we expect informal sector activities to be biased towards the low and stagnant productivity occupations? Simply because as the productivity climbs, there is a tendency to be organized formally. For example a backyard piggery that becomes a large farm becomes the object of attention of the municipal agriculturist; the fishball hawker who finishes his commerce degree becomes a formal sector sales rep. And so on. So wouldn't this method overestimate the size of the informal sector? (I suspect there may be an adjustment somewhere being made. I just wonder how this adjustment is being estimated officially.)