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The interaction between formal and informal businesses continues to grow in African countries. Yet, competition from informal enterprises remains one of the top three obstacles formal businesses face in sub-Saharan Africa. This paper investigates the effect of informal competition on the performance of innovative products introduced by formal firms. We combine the World Bank’s Enterprise Survey with the Innovation Follow-up Survey for five sub-Saharan African countries, and construct two indicators of informal competition, one regional (local)-specific and the other one industry-specific. We find that local informal competition has a robust negative effect on product innovation intensity of formal firms, while within industry informal competition enhances innovative sales. However, larger firms are less affected by local informal competition and actually get a boost in innovative sales from informal competition. We argue that local informal competition harms the performance of product innovation, but only for formal firms that lack strategic collaborative ‘footholds’ in the informal economy.

Innovation has become a key interest in sub-Saharan Africa (SSA), as it is argued to be pervasive, and play eminent role in generating employment. There is, however, a dearth of empirical evidence assessing the impact of innovation on firm employment for SSA. This paper investigates the impact of product innovations on job creation using data from the recent waves of the Enterprise Survey merged with Innovation Follow-Up Survey for SSA countries for which both surveys are available. We apply the Dose Response Model under continuous and heterogeneous responses to treatment. The results reveal a positive impact of product innovations on total employment. This result is, however, found to hold only at specific intervals of product innovation intensities. Our analyses also show that product innovations tend to create both temporary and permanent jobs as well as skilled and unskilled jobs. However, the positive impact of product innovations on temporary and unskilled employment tends to outweigh that of permanent and skilled employment, raising questions about the security and quality of the new jobs generated by product innovations.

The digital economy has led to significant socio-economic transformations in all aspects of our society and livelihoods. While there is a growing literature on the effect of digital platforms on development, none consolidates the available evidence from a development perspective. In this systematic literature review, we grouped the available literature into three main themes and critically synthesize and analyse the role of digital technology and digital platforms on the development of the modern economy. To enable the inclusion of a wide array of published papers, we allowed for relevant quantitative, qualitative, and mixed methods studies globally. This approach allows us to reflect on the role of digital platforms for development more broadly as well as discuss opportunities for future research.