Identifying resilient industries in Mexico's automotive cluster: Policy lessons from the great recession to surmount the crisis caused by COVID 19

Abstract

This study investigates regional employment and production resilience to adverse crisis shocks. We extend the concept of resilience beyond the notion of resistance and fast recovery to include the potential of positive spillovers to related industries in neighboring regions. The industrial analysis of the automotive cluster in Mexico relies on a spatial shift-share approach to characterize the resilience ability of regional industries. The study employs the Sub-Prime crisis as a benchmark to identify the type of employment and production recovery after an adverse shock of similar magnitude. Four industries within the automotive cluster present various degrees of spatial dependence-those industries with the most significant spillover effects on neighboring regions. The type of resilience shown by these automotive industries in the regions during the Sub Prime Crisis serves as a benchmark to base policy government and corporate decisions after the economic crisis caused by the outbreak of SARS-CoV-2.