Federalism is a type of government in which a central, or “federal,” government, and one or more regional governments work together to form one political system. Federalism is best recognized as a type of government wherein the powers are divided between the levels of government, and the people are subject to the laws at each level. Examples of federalism can be seen in the countries of the United States, Canada, and India, to name a few. To explore this concept, consider the following federalism definition.

Definition of Federalism


  1. The division of power in a nation’s government, between a central authority, and smaller regional governments.
  2. The promotion of a federal system of government.


1780-1790    Americanism

What is Federalism

Federalism is a form of government in which a central government and smaller regional governments control the same geographical territory. Authority in such a government must be delineated, to minimize conflict between laws of each level. The terms “federalism” and “confederalism” both originate from the Latin foedus, which means “treaty, pact, or covenant.” These terms were synonymous until the nineteenth century, when federalism became more representative of the unification of the two types of government, and confederalism began being used to refer to the grouping of governments at the state level.

Federalism, as it is known now, concerns the sharing of governing power between national and state governments, which is why state governments have their own laws, which are separate from those of the central authority. When the Constitution was being drafted, the Federalists advocated for a more powerful central government, while the Anti-Federalists wanted the central government to have limited authority.

Under the Articles of Confederation, the governing document prior to the U.S. Constitution, the United States did, in fact, have a weaker central government, considered by many to be ineffectual. As the Constitution was drafted, the framers proceeded with the intent to increase the federal government’s powers, without creating an overbearing authority.

European Federalism vs. American Federalism

The term “Federalist” refers to an individual who favors a strong central government, with governmental power being divided between that government and various regional governing levels. European federalism is reflected throughout history, as the continent has been comprised of significantly more separate nations or territories than North America. European federalism leans toward a weaker central government.

This differs from how a “Federalist” might be characterized in the United States, where federalism refers to a more powerful central government, and regional governments that retain their own lawmaking authority.

While American federalism in the modern sense is a lot closer to European federalism, some U.S. citizens feel that the federal government’s power has exceeded what was perhaps intended by the country’s Founding Fathers. Most citizens who might consider themselves “federalists” by the modern American federalism definition, actually argue for the federal government’s powers to be limited, particularly the powers of the judiciary.

European federalism examples can be found in countries like Austria, Belgium, Bosnia, and Switzerland. Germany and the EU are the only areas in the world where members of the federal “upper houses” of government are not elected, nor appointed, but are actually comprised of members of their constituents’ regional governments. A similar system could be seen in the early days of American federalism.

The 17th Amendment to the U.S. Constitution, created in 1913, changed how Senators from the various states would be elected from that point forward. Prior to that point, U.S. Senators had been elected by the states’ legislatures, rather than by the citizens themselves.

Federalism Example in Division of Powers

A classic example of federalism at the Supreme Court level occurred in 1803, when outgoing President John Adams signed a commission for William Marbury to become a justice of the peace, but the newly minted Secretary of State – James Madison – declined to deliver it. Marbury sued Madison to force him to deliver his commission. This all-reaching authority, of a Secretary of State to ignore a president’s appointment of a judge, became the focus of the Supreme Court’s review of the matter.

Chief Justice John Marshall, in this matter of Marbury v. Madison, set a precedent by establishing the idea of judicial review – a crucial element to the checks and balances system put in place to prevent any particular branch of the federal government from becoming too powerful. In accordance with Chief Justice Marshall’s decision, the Supreme Court, for the first time ever, declared a law – which had been passed by Congress, and signed by the President – to be unconstitutional. The Constitution did not specifically provide the Court with this power; however, Marshall believed that the Court should have an equal role in comparison to those of the other two branches of the federal government.

Examples of Federalism in Other Countries

As is to be expected, federalism in other countries is defined a little differently. Here are a few examples of federalism as it exists in other countries:


Australia’s federation officially began on January 1, 1901 – the very first day of a brand new century, give or take a year. When the United Kingdom colonized Australia in 1788, six colonies were established that would eventually go on to be self-governing. During the 1890s, referendums were held by each of these colonies’ governments to determine whether or not they would become a unified, self-governing “Commonwealth.”

The colonies all voted in favor of federation, thereby establishing the Commonwealth of Australia in 1901. Australia’s federalism closely resembles that of America’s original model, though it substitutes a presidential system with a parliamentary system.


A presidential system was established in Brazil in 1889, after the fall of the country’s monarchy. Federalism was established by Deodoro da Fonseca by decree, but every Brazilian constitution since the first in 1891 would go on to confirm this form of government, even if some of the newer documents would make some changes to the specific principles.

Power became centralized in Brazilian government in 1937 under President Getulio Vargas, with the establishment of an authority that would permit the appointment of state governors (“interventors”) at will. Brazil has gone on to become one of the largest federal governments in the world.


In Canada, powers are divided between the country’s federal parliament and its provincial governments. Canada’s Constitution Act of 1867, formerly the British North America Act, defines which powers are assigned to whom. Matters not covered by the constitution are normally handled by the federal government; however, there have been, and continue to be, long-standing conflicts over which level of government is entitled to jurisdiction on a variety of matters, including taxation and natural resources.


The Government of India (also known as the “Union Government”) rules over a federal union consisting of 29 states and seven union territories, and provides perhaps the most comprehensive example of federalism. India’s government is more complex than the governments of other countries, specifically because it operates on three separate tiers, each of which is assigned executive powers in accordance with the Constitution of India. In this way, India’s government resembles the United States, which also delegates powers to three separate branches: the legislative branch, the executive branch, and the judicial branch.

India’s government originally operated on the principle of a two-tiered system, as dictated by its Constitution, which consisted of the Union Government (the “Central Government”) and the State governments. The third tier, Panchayats and Municipalities, was added later on.

Presently, the Seventh Schedule of the Indian Constitution assigns governmental jurisdiction to the three tiers by way of three lists: the Union List, the State List, and the Concurrent List. The Union List handles matters of national importance, such as national security, foreign affairs, and currency. Only the Union Government can make laws pertaining to these areas. The State List does what its name suggests, delegating power to the State governments to preside over matters involving State and local importance, such as police, agriculture, and trade.

Finally, the Concurrent List blends the two aforementioned powers together and governs matters of interest to both the State and Union governments, like marriage, adoption, education, and trade unions. Both governments have the authority to make laws pertaining to these subjects. However, should conflicting laws be drafted, decisions then default to the Union government.

Fiscal Federalism

Fiscal federalism refers to the division of the various government functions, and how financial matters are to be distributed among the levels of government. More specifically, fiscal federalism deals with the transfer of payments, or issuance of grants, to lower level governments, so that the central government can share its revenues with the lower levels.

The federal government relies on a system of fiscal federalism to provide incentive for the states to adopt federal rules and standards while, at the same time, increasing the states’ operational revenues. To this end, there are two primary types of transfer: conditional, and unconditional. A conditional transfer from a federal government to a state or local government comes with a particular set of conditions, as the name suggests.

For instance, should a lower level of government be offered one of these transfers, it must agree to whatever spending instructions are given to it by the federal government in order to receive the transfer. An unconditional transfer, on the other hand, typically comes with no spending instructions, and is usually a cash or tax point transfer.

Example of Fiscal Federalism in Conditional Transfer

In the mid-20th century, it became obvious that people involved in automobile accidents were more likely to sustain serious, or even fatal, injuries when they were not secured into the vehicle. The federal government did not have the authority to create a law requiring all people to wear seatbelts, so another road to safety was taken. The federal government offered the states a monetary incentive to enact their own seatbelt laws.

Over a period of years, millions of dollars were handed out to states that passed primary seat belt laws, requiring all passengers to be restrained in motor vehicles. The money, once transferred to the states, could be used for any purpose that related to highway safety issues. This was a boon to states that needed to repave highways, install more traffic signals and signage, to address other safety concerns.

Fiscal Decentralization

Fiscal decentralization refers to the taking away of certain fiscal authority and responsibilities from the federal government, in favor of the regional or state governments. This gives the local governments the authority to raise taxes, and to determine their own expenditures. While fiscal federalism has been described as more of a guide containing fiscal principles that are to be followed, fiscal decentralization involves putting theory into practice and applying those principles to their applicable situations.

Related Legal Terms and Issues

  • Articles of Confederation – The original constitution of the United States, ratified in 1781.
  • Federalist – One who supports a strong central government.
  • Jurisdiction – The legal authority to hear legal cases and make judgments; the geographical region of authority to enforce justice.