Bruegel Event Recordings

There is growing recognition that the productivity slowdown experienced over the past two decades is partly rooted in a rise of adjustment frictions that rein in the creative destruction process. One important dimension of this phenomenon is that firms that would typically exit or be forced to restructure in a competitive market – i.e. “zombie” firms – are increasingly lingering in a precarious state to the detriment of aggregate productivity. In this view, reviving productivity growth will partly depend on the policies that effectively facilitate the exit or restructuring of weak firms, while simultaneously coping with any social costs that arise from a heightened churning of firms and jobs. Findings from this new OECD project suggest that there is a wide scope for improving the design of insolvency regimes as measured by new cross-country indicators. It also shows that the survival of zombies is related to faltering bank health and the persistence of tax bias towards debt. Building on a large volume of cros