Public Sector Contribution To Competitiveness

Abstract

Conventional measures of competitiveness in terms of final prices shed little light on how those measures are affected by public expenditure. By taking productivity as a common factor to any index of competitiveness we propose to assess the Italian Public Sector contribution by its productivity in providing public services. Integration of Data Envelopment Analysis with Principal Component Analysis provides a consistent methodology to face the problem of high dimensions, which is a characterising feature of public services provision. Results show a large geographical variability in Public Sector productivity and a significant differentiation in terms of both layers of government and types of services. Thus offering evidence to identify areas, services and tiers of government lacking efficiency and constituting a potential obstacle for growth. A East–West divide emerges on top of the Country’s traditional, though less marked than commonly thought, North–South divide.