Federalism blends geographical variety with national cohesion. The balance between these two concepts is reflected in the various forms of federalism, the division of responsibilities, and the cooperative partnerships between the federation and its member states. Political integration, cooperative federalism, and dual federalism should all be distinguished from one another. Democratic rule is expressed through federalism.

Term and Concept
The Latin word foedus, which meaning alliance or contract, is where the word federalism originates. Federalism is a voluntary agreement upon the structure of territorial governance. Individual territories pledge to work together indefinitely; in contrast to a federation of states, this means that the political sovereignty of the territory is constrained in favor of standardized federal decision-making. State law yields to federal law. The federation is expected to act with consideration for its members' decision-making processes. The division of a political system into territorial units and the creation of a unique constitution for each unit, founded on the concept of popular sovereignty, are the fundamental elements of federalism.

Forms of Federalism
Federalism is invariably a trade-off between variation and homogeneity in space. Diversity is necessary for a number of reasons. These are historical in many cases (USA, Canada, Germany, etc.). Formerly independent areas have united to establish a shared national territory. The member states want to preserve their unique identities and significant areas of expertise within this "unifying federalism." Federalism may also arise from a state's dissolution.

Unitary states are rarely stable, especially in multiethnic communities with territorially concentrated ethnic, religious, or other minorities and/or stateless nations (cf. Heinemann-Grüder 2011). Federalism, which can be utilized to try to keep a state together (e.g. Belgium, Iraq, Bosnia-Herzegovina), is an alternative to the dissolution of these states. Since the number of member states required for federalism is not fixed, federalism also permits a flexible differentiation of regional representation in states that now have federal government. The need for autonomous spatial representation can be satisfied and a state structure can be stabilized by the restructuring of federal states (Germany) or the founding of new ones (Switzerland: Jura canton; India, for example, Telangana became the 29th federal state in 2010).

The degree of similarity between the disparate regions of the nation determines whether or not such an endeavor is effective, rather than the precise configuration of federal systems. The Czechoslovak Federation (1989–1992), Yugoslavia, and Sudan (where South Sudan gained independence in 2011) are a few instances of failed federal nations.

Forms of the Division of Competences
Different types of federalism are constituted by the ways in which competences are divided. Within the federal system, competencies can be assigned in accordance with the clearest separation system conceivable, whereby member states and the federation independently manage their own domains and collaborate only in a limited number of well-defined areas. This translates to the entire spectrum of federal and member state political entities. Due to dual federalism, each level has its own constitution, government, parliament, constitutional courts, and administrative bodies. According to the economic theory of federalism, dual federalism is the best option (cf. Oates 1972; Sauerland 1997). It permits competitive federalism, or territorial competition at all levels.

If successful, political experiments carried out by one member state may be emulated by other members as well as by the federation. While it is inevitable that some experiments will fail, the country as a whole is not harmed. Voters in dual federalism elections are able to assign responsibility and make the appropriate deductions (cf. Tiebout 1956). They don't have to wonder if the state, the federation, or the EU made a particular decision. The federal state parliaments are important since they serve as the states' own legislatures. Markets react with matching risk premiums for individual member states seeking loans, depending on how well or poorly federal state policy works.

Financial Federalism
The revenue systems in federal states are designed analogously to the models of cooperative and dual federalism (see Table 2; cf. Döring 2000, who compares US and German financial federalism). Dual federalism usually has a separate system with both the federal and member state level having sovereignty over the organisation of tax collection. The principle of fiscal equivalence applies (cf. Olson 1969), which means that each political level is responsible for creating a balance between revenue decisions and spending decisions. In cooperative federalism, a system of tax revenue sharing and distribution can be expected, or the exclusive right to levy taxes by the federation.

This does not exclude the possibility that, after the tax has been levied, the revenue from a particular type of tax is allocated in advance to the member states (revenue sovereignty). However, the decisive factor for the cooperative federalism model is that the member states are financially dependent on the federation or on federal legislation.

Intergovernmental relationships
There are various ways to organize cooperation between federal states and federations. The spectrum includes working together on federal legislation in the federal parliament's second chamber as well as casual partnerships. For instance, in the United States, governors of federal states can only act as legislators' advocates in Congress if they wish to sway federal legislation to their advantage.

Alternatives have been tried in other nations, such Austria and Canada, where, similar to the USA, the establishment of party political camps predominates and the second chamber is excluded as a venue to bring federal state concerns into the legislative process. Here, the leaders of the regional administrations convene on a regular basis, occasionally with federal government representatives as well.

Federalism and democracy
The relationship between federalism and democracy is disputed by positive federalism theory (cf. Benz 2009). This perspective holds that all states, even autocracies like Russia, are federal if they identify as such. Conversely, normative federalism theory contends that federalism and democracy are intrinsically intertwined (cf. Sturm 2015). It views federalism as a vertical division of authority between the legislative, executive, and judicial branches in addition to the horizontal one.

The federation's power is limited and the use of power is checked by democratic governance inside member states. Member state parliaments reduce the distance between electors and their representatives and help to manage policies. Elections to member state parliaments in homogeneous federal states have also evolved into a form of temporary election for federal policy.

Resolving Conflicts between the Federation and Member states
Formal or informal means can be used to settle disputes between the federation and its member states on resources and interpretations of the federation's role and function. The Supreme Federal or Constitutional Court is the formal forum for this kind of proceeding; the court's authority to do so is derived from the constitution. Prior to this, concessions within the legislative process are always possible; these compromises are made possible by federalism's ability to tolerate gradual trade-offs.

There is a finite number of stakeholders, and some concessions may be granted today in return for other concessions down the road. The option of secession as a conflict resolution tool is limited to situations in which the democratic legitimacy of the federal state is seriously questioned.

Informally, coalitions made up of specialized politicians from several political levels diffuse problems under federalism. As long as they don't just act unilaterally as regional parties in one member state, representing specific interests, political parties have an even greater influence. Within the context of party competition, national parties incorporate the disparate interests of each member states (cf. Lehmbruch 2000). They accomplish this in two ways: first, they mediate a national compromise between the various political stances held by the member states on a given issue; and second, they act as lobbyists for these stances in their local party organizations, flexibly taking into account divergent positions in individual member states.

Written By: Akanksha