Centralized political systems concentrate power and decision-making in a single unit, which can be dispersed geographically, but is more frequently focused within a single city. Decentralized political systems divide power among several units, which usually occupy distinct territories. A familiar American example is the division of power between the federal government and state governments. American governance is a hybrid arrangement that combines elements of both centralized and decentralized political systems.

Centralization: Federal Power

Federal decision-making occurs within agencies all over the country, but the focal point is in Washington, DC, where the heads of the executive, judicial and legislative branches all reside. One of the chief advantages of centralized political systems is economic; it fosters the ability to unify markets and develop a uniform tax code. Funds for defense, maintenance of foreign relations, regulation of commerce and the development of economic growth are readily available. One disadvantage is a bottleneck effect, which occurs when critical decisions must flow through a smaller group of people, making it difficult to respond to all needs in a timely manner.

Decentralization: State Power

The 50 U.S. states each have its own capital, legislature and state judiciary. They serve as smaller replicas of the federal system, each empowered to devise its own laws. Some powers are reserved to the states and some to the federal government. The advantage of a decentralized political system is that different problem-solving approaches can be tested, then effective solutions can be identified and widely adopted. A clear disadvantage of decentralized power comes in the area of efficiency. With 50 different centers of power, many similar functions are duplicated.


When America was in the process of creation and development, there were different views of how the nation should be administered. Representatives of rural, agricultural living, including Thomas Jefferson, expressed a strong preference for decentralized political systems. Urban counterparts, most prominently Alexander Hamilton, focused on manufacturing, commerce and centralized power systems. Their views formed the early basis for many of the philosophical differences between the Democratic and Republican parties in the U.S. today. The issue of decentralized states' rights and centralized federal law has been at the forefront of myriad issues, most recently involving medical versus recreational use of marijuana.


According to the International Monetary Fund, the overall global trend has been toward increasingly democratic and decentralized governmental systems. During the mid 1970s, 33 percent of countries held competitive elections. By the turn of the millennium, countries holding competitive elections increased to 60 percent. Another trend is the increasing influence of multinational corporations, which are dispersed among different countries. Their influence is decentralized in the sense that they serve a variety of markets and their attention is narrowly focused on their spheres of influence. But with budgets exceeding that of many nations, larger companies are becoming de facto political entities in their access to resources.