Enough of this "Italy ruined WW2 next time without italy" meme
The first responsible for Italian lack performance in WW2 is Adolf Hitler
Mussolini was perfectly aware that Italy was not ready for a modern war, as the Ethiopian Campaign proved with no doubt (a waste of resources for little gain, with a bad equipped army led by unfit officers)
He knew that only a strong nation can generate a strong army, so first, he spent a big amount of resources to modernize Italy with many reforms (example: Public Education, Welfare and most important a new health care system, so well done that it became the base for the EU healthcare system). After this he supported the building and farming systems at the same time, reclaiming wetlands and supporting the farmers.
In 1939 Italy was almost at the same level of the other nations for the economical aspects, but the army was still unprepared. For this, when he signed the alliance with Germany, Mussolini personally asked to Hitler to not begin a great war against the western countries before 1943, in order to allow to italy to prepare and modernize its army (the new m13/42 medium tank, the Folgore/Veltro's fighters and new battleships were yet to be completed, and he was still replacing the shitty officers)
Hitler promised to respect this, but when he signed the Molotov-Ribbentrop pact he believed to have eliminated the biggest threat, so he violated the pact and started his war (there's a letter by foreign minister Galeazzo Ciano, which states that Mussolini, informed of the War, called Hitler and Ribbentrop "reckless idiots").
Mussolini tried to avoid the war, but with french defeat he started to believe that Hitler was really invincible, and that not joining him could bring to a German invasion of Italy, so, despite Italy's lack of military preparation, dragged Italy into a new war.
Also, fascism general thread.
Mussolini's version here
worldfuturefund.org