On the effectiveness and the efficiency of government intervention on dissolved municipalities

Abstract

The subdivision of Italy into regions, provinces, and municipalities has long been justified by the necessity of the Italian Government to exercise a much more efficient control over the entire State. But one obvious question arises: has this administrative system based on such a substantial decentralization of power and resources always led to the desired results? Needless to say, several issues have been undermining the ability of local entities to safely act in conformity to the Italian Law and to behave fairly in the management of public resources (i.e., some intrinsic conjectures of Italian local municipalities, the financial crisis, the collusion of local municipalities with criminal organizations, etc.). Thanks to novel information and data on local public finances in the Italian context, we have all the ingredients to answer the question of whether Government interventions in financially distressed municipalities are effective and efficient in restoring the public finances at a local level. The reminder of the dissertation is as follows: Chapter 1 of this research will be introducing the topic and the related literature of interest. To this purpose, it can already be anticipated that the most relevant pieces of evidence for my research were extrapolated by the book Rapporto Cà Foscari sui comuni 2020 (2020), whose author is Prof. Stefano Campostrini. This book is actually an annual report drafted by several researchers from the University of Cà Foscari that stands out as the most widely used and attainable source of information in relation to the financial condition of Italian municipalities. Il dissesto finanziario negli enti locali alla vigilia dei Decreti Legislativi n. 149/2010 e n. 174/2013. Analisi del fenomeno italiano., Falilò (2013), counts as another interesting reference, thus contributing to the discussion. In his research, the author proposes an analysis of the phenomenon of financial distress in the Italian municipalities by making reference to the entry into force of the "Italian legislation on the Financial Distress of Public Authorities" (1989) and to the amendment of "Titolo V" of the Italian Constitution (2001). The dissertation is going to focus on the aftermath of the declaration of financial distress (which is regulated by the D.L. TUEL. n.267 N. 66/1989). Interestingly, Di Cataldo and Mastrorocco’s Organised crime, captured politicians, (2020), and the allocation of public resources clearly showed the existence of a statistically significant interdependence between situations of critical public financial distress in southern local municipalities and Mafia infiltration. They conclude that the collusion between criminal organizations and local administrations severely affects the allocation of public finances. Intending to contribute to the research on this topic, this thesis aims at answering the following research questions: how do local municipalities face the problem of restructuring their public finance situation? Does the dissolution imply a reduction in the public services normally granted to the citizens? Does the financial situation of dissolved local municipalities get any better when ending the restructuring program? Chapter 2 will be presenting the methodology adopted throughout the research. By relying on the literature referred to the topic in question, the thesis will focus on local municipalities taken from the regions that have been identified as the areas where the rate of financial distress is the highest (namely Campania, Calabria, and Sicily), though considering all Italian districts. The methodology was built after careful revision of the different quantitative approaches proposed by several researchers. Obtained results will be presented and commented upon, along with the comparisons across the three different periods mentioned above. Finally, Chapter 3 will be dedicated to the conclusions and the final remarks grounding on the obtained results.