Financial crisis and growth sustainability in local government have become significant topics in the last decade.
The many targets Public Administrations strive to pursue may look diverging each other, if framed on a static and sectoral perspective. Such view is often adopted by both law prescriptions and the professional practice. Often the primary focus of analysis is on only financial statements and on the adjustment of debts.
In this perspective, the search of the causes behind crises is primarily done in financial and juridical terms. On the contrary, such search is not primarily adopted as a means to understand how socio-political and managerial phenomena in the wider system where a public sector institution operates have affected the current insolvency state of the institution itself. This approach does not support the outline of sustainable policies in the long run, that may counteract the financial crises at their own roots, to change the systemic structure of physical and intangible factors, whose interplay underlies the risk of bankruptcies.
Most of such factors are often outside the direct institutional domain and the control of governments. For example: population, businesses located in a region, employment rates, regional image and attractiveness, perceived efficiency and effectiveness of public services, trust and loyalty towards government, social capital, quality of infrastructures, capability to network, quality of life. Public policy makers often misperceive the delays affecting the accumulation and depletion processes of such factors. The endowment and deployment of the strategic resources in a local area, may affect the drivers of unsuccessful financial results.
There is a gap in today’s Public Administration between its current and expected capability to deal with dynamic complexity. The use of system dynamics (SD) modeling and simulation may significantly enhance the capability of governments to fill such gap. SD modeling applied to performance management can successfully support an outcome-oriented view in the drawing up of restructuring and reorganization plans, to outline sustainable policies that look beyond a ‘debt adjustment’ perspective, and may support decision makers’ learning processes about a local area’s capability to build up and preserve a competitive advantage.
The SD Group of the University of Palermo focuses such challenges. It jointly delivers the “European Master in System Dynamics” with the Universities of Nijmegen, Bergen, and Lisbon. This is an ‘Erasmus Mundus’ EU-funded program, whose purpose is to train the future professional generations to better perceive the dynamic complexity of today’s world and lead strategic organizational learning processes, to design and implement sustainable restructuring and development policies.
The program engages students in real life case-study analysis, through a method that enables them to enhance the acquisition of Public Management skills through the use of SD modeling and simulation.
This paper discusses the teaching strategy adopted in the program, where Dynamic Performance Management applied to the public sector is taught.
The experiences, challenges and opportunities for the future development of program are discussed in the paper, with a specific reference to the contribution of the Master program to local government.
