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What is Federalism?
Federalism is a system of governance in which power is constitutionally divided between a central authority and regional or state governments.
Definition
Federalism refers to a political and administrative structure where sovereignty is shared between national and subnational governments, each with defined and protected powers.
Key Takeaways
- Divides authority between central and regional governments.
- Powers are typically закрепed in a constitution.
- Enables regional autonomy within a unified state.
- Common in large, diverse, or multi-regional countries.
Understanding Federalism
Under federalism, the central government handles nationwide responsibilities such as defence, foreign affairs, and monetary policy, while states or regions manage local matters like education, healthcare, and policing, depending on constitutional design.
Federal systems aim to balance unity and diversity by allowing regional self-governance while maintaining national cohesion. Disputes over authority are usually resolved through constitutional courts or legal frameworks.
Examples of federal states include the United States, Germany, India, Australia, and Switzerland.
Importance in Business or Economics
- Shapes regulatory environments across regions.
- Influences taxation, public spending, and fiscal coordination.
- Affects investment decisions through jurisdictional differences.
- Determines policy consistency versus regional flexibility.
Types or Variations
- Dual Federalism – Clear separation of national and state powers.
- Cooperative Federalism – Shared responsibilities across government levels.
- Asymmetric Federalism – Unequal powers granted to different regions.
Related Terms
- Federal Government
- State Government
- Constitution
- Decentralisation
Sources and Further Reading
- Investopedia — Federalism
- Encyclopaedia Britannica — Federalism Overview
- World Bank — Governance Structures
Quick Reference
- Shared sovereignty system
- Central and regional authority
- Constitutionally defined powers
Frequently Asked Questions (FAQs)
How is federalism different from a unitary system?
Federalism divides power between levels of government, while unitary systems centralise authority.
Can federal systems change power distribution?
Yes, typically through constitutional amendments or legal interpretation.
Is federalism only political?
No. It also has fiscal and administrative dimensions.
