The sustainability of the Italian public finances: an overview

The Italian international reputation in mainly related to the high level of its public debt. During the Great Recession, this fact, associated to the stagnation of productivity, raised serious doubts on its economic and financial sustainability. The doubts are legitimated also by the fact that Italy is a net borrower of capitals from abroad, as its Net International Investment Position (NIIP) is negative. The statistical analysis of the Italian public finances suggests how the deep causes of the Italian financial and economic fragility rest in the malfunctioning of the institutional (public and private) and economic framework. The Italian economy should manage its structural weaknesses: i) by maturing a long term view able to involve the capital stocks in the economic reasoning; ii) by enabling SME and citizens’ participation in all the economic activities; by empowering the third sector and more in general non profit activities in order to facilitate the formation of social capital.