REGIONAL INPUT-OUTPUT MATRICES AND AN APPLICATION TO ANALYZE A MANUFACTURING EXPORT SHOCK IN MEXICO

Abstract

Based on the national Input-Output Matrix (IOM) 2012 calculated by INEGI, we estimate with the Flegg approach four regional Input-Output Matrices (RIOMs) using Banco de México’s regionalization (Northern, North-Central, Central and Southern). These RIOMs are employed to evaluate the impact on regional gross output, value added and employment from a 10,000 million dollar shock on Mexican manufacturing exports. The results show that the effects on the absolute values of gross output, value added and employment in the North are clearly larger than those estimated for the other regions. Another finding is that the total effects of the regional shocks tend to concentrate in the manufacturing sector, with the highest concentration observed in the North, and the lowest in the South. It is also shown that the North is, by far, the region experiencing the greatest change in its value added relative to GDP, followed by the North Central, the Central and the South. The results suggest a strong linkage between the manufacturing sector and tertiary activities, particularly commerce and services in the central regions, as well as between manufacturing and oil and gas extraction in the South.