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answerable to the E.U. Such asymmetry can create free-riding among local governments, as has been highlighted by
many European researchers. Internal stability pacts are an initial answer to this and other issues raised by the European
pact but, as in the Italian case now, they rely for effectiveness mainly on the cooperative attitude of local and regional
governments and do not provide incentives or conditionalities to assure its attainment, or tools to react to cyclical effects
by which local entities are now significantly influenced.
What is important to highlight here is the difficulty of reconciling full achievement of the advantages of fiscal
decentralisation (both allocative and political) with full exploitation of the advantages offered by complying with E.U.
commitments. 6. AN EXPERIMENT OF NEW CENTER-LOCAL RELATIONSHIP : STRATEGY AND RULES OF THE 20002006 OBJECTIVE 1 DEVELOPMENT PROGRAM The 2000-2006 objective 1 planning process governing the use of European structural funds to less developed areas
gave the Italian government a chance to shift towards a more adequate policy approach, designed to increase the
territorial competitiveness of the Mezzogiorno; this came after a period of regional policies which were designed to
compensate competitive disadvantages of lagging-behind regions with a sectorial, top-down approach, based mainly on
incentives to the private sector.
The significant amount of resources (around 50 billion Euro of European and national public resources) for investments,
the possibility of designing a new set of rules conditioning their use, and the constraints in terms of accountability and
credibility of results requested by the European co-financier, made it possible to put into action some lessons learnt in
the last decade, when profound changes occurred in the economy and society of Italian regions, despite the significant
decrease of public investment since 1992.
In the Nineties, a very lively entrepreneurial climate in some areas of Mezzogiorno led to an increase in the turnover rate
of non agriculture firms and in local firm agglomerations, in exports and inward flows of foreign tourists. Local
partnerships between private and public actors based on the definition of common projects, financed by the central
government (territorial pacts), proved to be an effective instrument to foster private investment and local relations. The
reform of the municipal electoral system, which increased responsibility and accountability of mayors by empowering
them through a direct election, made possible the resurgence of some urban areas. The experience of the Nineties
showed that significant changes can take place in the Mezzogiorno if a proper institutional design is devised and if
responsibility is increased at a local level.
The plan therefore aimed at enhancing the positive signs registered in the Nineties, through the definition of a strategy
and of a set of rules which focused on the lasting objective of increasing territorial competitiveness of the Mezzogiorno
and attracting increasingly mobile capital, turning the challenge of Monetary Union into a major asset. 1 256 These are bodies formed the first by the...
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