Building a State’s Global Competitive Advantage by Improving Its Finances: A System Dynamic Model Tailored for the Italian State

The present study analyzes and tests a new way to recover economy and public finances in time of crisis. An exclusive focus on State financial short-term stability risks to undermine the economic growth and to erode the social environment, thus it depletes the sources of State finances on the long-term. While a sustainable strategizing focuses on performance drivers that generate these last. Such approach in public strategizing is based on the assumption that State could increase its budgets by improving the organizational and legal framework in which private firms operate, in order to reduce their overhead costs for compliance of rules, and public facilities’ inefficiencies. This improvement margin enables the national economic environment to be more globally competitive, and, consequently, to take advantage of new national and foreign investors and of existing firm’s retention. By quantitatively linking a state organization’s performance to that of private firms, the system dynamics model demonstrates how this eventually leads to an increase in financial resources for a government organization. In absence of such improvement, the model shows how delocalization would create a huge financial loss for the government: losses that public officials seem to ignore.