Unformatted text preview: is deemed to work because of the power of incentives. 7. CONCLUSIONS The process of decentralisation is under way and it has already deeply changed the nature of Italian governance
structure. Regions have now higher competencies and financial autonomy and much higher responsibility for policy
design, evaluation of investment opportunities and risks, monitoring expenditure management and enhancing efficiency
of service provision.
Institutional fragmentation is still very high, 58% of municipalities have less than 3,000 inhabitants and the provision of
high quality services will require enhanced management and technical capacities but, above all, cooperation among
The economic and structural gap which characterizes the territorial differences between the centre-north and the south
need to be reduced in order to allow for decentralisation and fiscal federalism to produce the expected benefits and
minimize the undesired costs.
Intergovernmental arrangements and equalisation mechanism are not fully designed yet and they do not respond to a
clearly defined model of federalism. Though southern regions have the same demand for higher decision-making power
on expenditure and higher fiscal autonomy they cannot compete yet on a level-playing field with northern regions.
A model stressing horizontal federalism and geographic competition may delay or reduce the chance of Mezzogiorno to
fill the gap with Europe. However an incentive-based system where cooperation and competition among levels of
government are carefully mixed and public investment policies properly targeted and where an equalisation mechanism
counterbalances lower fiscal capacity may create the proper conditions for the Mezzogiorno to improve accountability
vis-à-vis its constituencies, public administration efficiency and enhance the quality of service provision. 261 Commission on Fiscal Imbalance REFERENCES
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