The living dead are rising once again. After a temporary decline between 2016 and 2019, corporate zombification has once again been on an upward trend globally, says a recent study by Bruno Albuquerque and Roshan Iyer at the International Monetary Fund. This, the researchers say, leads to “congestion effects.” Healthy firms experience lower investment, employment and productivity growth as unviable rivals waste resources.
Better-quality enterprises also suffer faster exits, and new entrants are slower to arrive. “Zombie firms may cast a long shadow on the economy,” the IMF economists conclude.
That shadow crept up on India a decade ago. In 2012, Credit Suisse Group AG — which, as irony would have it, has itself gotten swallowed up by UBS Group AG — wrote an influential report about the country’s most indebted companies, titled “House of Debt.” As the house burned,…
