Federalism and Democracy: From Idea to their Implementation

Abstract

The paper analyzes positive economic effects of federalism due to both integration of an economic space and decentralization of governmental powers and responsibilities. The latter includes the correspondence between public goods provided and local demands as well as competition between subjects of federation for mobile resources, which encourages innovations and experiments in the field of public administration and serves as a built-in limiter of nationalization of the economy. The paper also discusses the criteria and institutes of federalism, principles of their realization; a role the local governments play in the development of federalism; and issues of how federalism complies with democracy in terms of complementarity and substitutes.