zombie effect

Meaning

A situation where a company or entity remains in operation despite being insolvent, often due to government support or subsidies, and is unable to restructure or pay off its debts. This can lead to a drain on resources and hinder economic growth.

Examples

• The zombie effect has been observed in several industries, where companies are kept afloat by government bailouts despite being unprofitable.
• The zombie effect can have a negative impact on the economy, as it can lead to a misallocation of resources and prevent more efficient companies from emerging.