Recovery Capacity of the Finance System of Italian Municipalities After the Currency Crisis of 1992

This paper is a first pioneering attempt to apply the concept of resilience to the analysis of the public finance systems of local governments, a concept already used and “abused” in various disciplines and fields of science. In particular, it proposes an attempt to estimate the recovery capacity of Italian Municipalities in a crucial period of our country’s financial history, between 1992 and 2000, or between the currency crisis and the introduction of the Euro. However, the analysis also involved the subsequent trends, in order to demonstrate that the current vulnerability of the municipal public finance system, in particular of the Municipalities of Southern Italy, depends not only on the economic cycle but also on the continuous and incessant changes in the financing mechanisms of local governments established by the central government. The analysis showed a lower financial resilience of the Municipalities of the Mezzogiorno (island and continental) compared to those of the Center-North. The determinants of this phenomenon were found, for one part, through the analysis of the financial data of the Italian Municipalities – as presented by the SVIMEZ in its annual reports on the economy of the Mezzogiorno – and, for another part, through the critical synthesis of significant economic events which occurred during the period examined.