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Pandemic and SMEs in an emerging country

Author

Listed:
  • Hernán Bejarano

    (Division of Economics, CIDE)

  • Pedro Hancevic

    (Division of Economics, CIDE)

  • Héctor Núñez

    (Division of Economics, CIDE)

Abstract

In this paper, we analyze the impact of the COVID-19 pandemic on the sales and expenditures of small and medium-sized businesses in Mexico. Using a novel survey that captures the economic conditions and expectations before and during the pandemic, we also incorporate electricity billing data as a proxy for economic activity and as a revealed measure of firms' flexibility in reducing costs. We examine these variables in relation to firms' characteristics, adaptation strategies, and expectations during the pandemic. Our analysis employs non-parametric tests and a set of econometric models, revealing a significant decline in sales alongside limited flexibility in expenditures. The effects vary depending on the strategies firms adopt to cope with the crisis and their negative expectations regarding a quick return to normality. Consequently, most SMEs face a precarious economic situation, highlighting the need for new policies and strategies to enhance their survival prospects in emerging economies such as Mexico.

Suggested Citation

  • Hernán Bejarano & Pedro Hancevic & Héctor Núñez, 2024. "Pandemic and SMEs in an emerging country," Working Papers DTE 639, CIDE, División de Economía.
    • Handle: RePEc:emc:wpaper:dte639
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    File URL: http://www.economiamexicana.cide.edu/RePEc/emc/pdf/DTE/DTE639.pdf
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    More about this item

    Keywords

    COVID-19; small and medium-sized enterprises (SME); activity restrictions; electricity consumption; emerging countries;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices

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