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- Federalism is a constitutional mechanism for dividing power between different levels of government, such that federated units can enjoy substantial, constitutionally guaranted autonomy over certain policy areas while sharing power in accordance with agreed rules over other policy areas. Thus, federalism combines partial self-government with partial shared government (Elazar 1987).
- Identity: as a means of ensuring peace, stability and mutual accommodation in countries that have territorially concentrated differences of identity, ethnicity, religion or language.
- Efficiency: as a means of improving service delivery, ensuring decisions are made at the most appropriate level, protecting against the over-concentration of power and creating more opportunities for democratic participation.
- While federalism has helped some countries settle conflicts or improve governance, it can also exacerbate existing differences, sometimes leading to deeper conflicts or state failure.
- Federalism is a complicated, often legalistic, form of government, which can be expensive and can hinder the coherent development and application of policies.
- Federal systems are usually associated with culturally diverse or territorially large countries. Notable examples of federal or quasifederal countries include Argentina, Belgium, Brazil, Canada, Germany, India, Malaysia, Nigeria, Pakistan, Spain, South Africa and the United States of America.