Regionalization is a contradictory process meaning both subnational fragmentation of territorial states and their supranational integration at a larger scale. In this paper federalism, as a division of sovereignty between several orders of government within the same political system, is conceived as an institution designed to regulate regionalization. But federal pacts are subject to two symmetrical risks: either, a risk of a centralizing drift towards a unitary state; or a risk of disintegrating into as many sovereign states as previous federated units. Thus, in the first section of the paper, we define a ‘true’federal system as a political order where an institutional device permanently tackles the problem of self‐conservation of the federal principle. Then, in the second section, we show that self‐conservation of a federal system or its evolution towards centralization or dissolution, are not first order dependent on economic issues, but on specific institutional forms that rule the game of political and social actors. To demonstrate this we take a comparative view of equalization programmes for tax revenues which distinguish Canadian federalism from its US counterpart. For these programmes channel competition between governments on political grounds and participate in the self‐reproduction of the federal covenant. On the contrary, a lack of equalization liberates economic competition between federal states – tax war, social dumping – and leaves the ground free for centralization or dissolution of the federation.
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