Illegal production comprises:

- the production of goods or services whose sale, distribution or possession is forbidden by law; and

- production activities which are usually legal but which become illegal when carried out by unauthorised producers, e.g., unlicensed medical practitioners (SNA 6.30).

There may be no clear borderline between the underground economy and illegal production. For example, production which does not comply with certain safety, health or other standards could be defined as illegal. (SNA 6.35).

The scope of illegal production in individual countries depends upon the laws in place. For example, prostitution is legal in some countries but illegal in others.