Abstract
Chapter 4 explores the ramifications of the evolving demographic conditions and fiscal reforms for the careers of local political leaders. The focal issue is the moral hazard embodied in these leaders’ opportunistic use of public enterprises for career advancement and revenue control and manipulation during the 1980s and early 1990s. Their dominant strategy was to promote sales growth without a close link to profitability among the public enterprises under their purview. This strategy helped grow output, revenue, and employment, thereby contributing to the political and economic interests of local officials. Yet it also undermined the financial and organizational health of public enterprises and pushed them down the road to destruction.
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