"Formal companies have greater incentives for innovation when an informal competitive sector is present." This was stated by Pedro Mendi, researcher resident at the Navarra Center of International Development (NCID) of the Institute for Culture and Society of the University of Navarra. The expert presented his work "Informality and Innovation" at seminar .

The paper studies the relationship between competitiveness vis-à-vis informal firms and the innovative activities of formal firms. It uses data from the World Bank's Enterprise Survey.

"It is assumed that goods are produced in the informal sector that are inferior to those in the formal sector," notes Professor Mendi, who has found a positive correlation between the introduction of an innovation and the intensity of competitiveness with firms in the informal sector.

presentation at United Nations University (Maastrich)

With this starting point, he constructed a model of skill with vertically differentiated goods to explain the results of research. Thus, the study proposes a model with a monopolistic formal sector versus the skill of the informal sector, to observe under what conditions the former has greater incentives to innovate.

Pedro Mendi presented his article at United Nations University (UNU-Merit), in Maastrich, at the invitation of Pierre Mohain, professor at UNU-Merit and associate member of the Centre Interuniversitaire de Recherche en Analyse des Organisations (CIRANO), Canada. (CIRANO), Canada.