DMPQ: What is competitive federalism? Comment on its demerits and merits

Competitive federalism make states a competitive unit which provides a package of services and fiscal environment that attracts more resources. It is akin to market place system.

 

Benefits of CF:

  • Promotes innovation
  • Better services to citizens
  • Place emphasis on continuous reforms
  • Discipline state fiscally
  • Best suited to deal with the pressures of globalisation
  • Harmonisation of laws and policies
  • Quashing of archaic laws and executive directions
  • Adoption of best practices.

 

Negatives:

  • Can foster unequal competition
  • Concept more applicable to countries like USA.

 

 

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