The slump of public investment in Italy and the role of the different levels of government. An analysis on the last two decades

The paper aims to provide a run-through of the public investment trends across levels of government in Italy from 2000 to 2017, using Conti Pubblici Territoriali (CPT) dataset. The focus is on both the central government and sub-national governments and on investments made by public companies at the national and local levels. The analysis shows that there has been a dramatic decline in public investment in Italy since 2009, implying a substantial investment gap. This decrease has mainly been driven by the decrease in investments by local governments, which have historically accounted for roughly 60% of the country’s overall public investments. Moreover, Italy’s regional divide remains large, and sadly, it continues to grow. The paper also highlights that the limited effectiveness of relaunching public investment is not ascribable to a single factor, but rather lies in the coexistence of several elements, such as obstacles in transforming the allocated financial resources into actual construction sites, excessive bureaucracy, and complex institutional and regulatory framework. Finally, some policy prescriptions are suggested.