Federalism Impact on Economic Growth: an Institutional Perspective

Many states include the word “federation” in their name, which allows to assume that most people have positive perception of federalism as a form of governance. Switzerland and some other countries have shown how fiscal federalism can work in practice for the benefit of society. At the same time, the states that try to copy this undoubtedly positive experience, as a rule, encounter significant difficulties. The article shows how fiscal federalism can influence economic growth of the state and explains why “working” federalism occurs so rarely.