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Federalism is a system of government in which power is divided between a national government and various state governments. In the United States, the U.S. Constitution gives certain powers to the federal government, other powers to the state governments, and yet other powers to both.  Federalism is one of the most important and innovative concepts in the U.S. Constitution, although the word never appears there. Federalism is the sharing of power between national and state governments. In America, the states existed first, and they struggled to create a national government.