Fright or Fait Accompli: Zombie Firms among Small and Medium-Sized Enterprises in Japan

Fright or Fait Accompli: Zombie Firms among Small and Medium-Sized Enterprises in Japan

Scott Wilbur - Japan Foundation CGP Postdoctoral Associate in East Asian Studies

Tuesday, September 24, 2019 - 12:00pm to 1:30pm
Room 202, Rosenkranz Hall See map
115 Prospect Street
New Haven, CT 06511

Lunch will be served.

In recent years and particularly since the global financial crisis, zombie firms—unprofitable businesses supported by financial relief—have generated widespread concern due to their purported harm to economic vitality. Studies contend that these firms congest the normal flow of capital and human resources to healthy businesses, thereby defying creative destruction and hurting investment and employment growth. Addressing zombie firms from a political economy perspective, I examine a novel hypothesis about the role of credit guarantees in sustaining these weak firms. Results from a case study of small and medium enterprises in Japan in the 1990s and 2000s suggest that credit guarantees indeed contributed to numerous zombies among this firm category. However, I also find that these firms tend to escape quickly from zombie status, calling into question their harm to the wider economy.

Scott Wilbur was the 2018 Banque de France Chair at the Center for French-Japanese Advanced Studies of the École des Hautes Études en Sciences Sociales (EHESS). He holds a Ph.D. in political science and international relations from USC. His dissertation analyzes the political economy of zombie firms, unprofitable businesses supported by financial relief.

More broadly, Dr. Wilbur’s research examines how political institutions and politicians influence economic outcomes, with a regional focus on Japan. His research has been funded by a Fulbright grant.

Sponsored by The Japan Foundation Center for Global Partnership