Pandemic and SMEs in an emerging country

Hernan Bejarano, Pedro Hancevic and Héctor Núñez ()
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Héctor Núñez: Division of Economics, CIDE

No DTE 639, Working Papers from CIDE, División de Economía

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.

Keywords: COVID-19; small and medium-sized enterprises (SME); activity restrictions; electricity consumption; emerging countries (search for similar items in EconPapers)
JEL-codes: D22 L20 Q41 (search for similar items in EconPapers)
Pages: 54 pages
Date: 2024-09
New Economics Papers: this item is included in nep-dev, nep-ene, nep-ent, nep-ind and nep-sbm
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