Federalism is valued for its ability to improve economies, increase political participation, and protect rights. A study classified 73 countries based on their governance type and found that decentralized policy-making enhances property and civil rights, leading to better economic performance. Constitutionally established provincial governments provide an extra layer of protection for policy decentralization. Federal institutions safeguard policy decentralization, which in turn leads to positive outcomes. Additionally, federalism is most effective when combined with democracy, as adding policy decentralization to a dictatorship does not significantly improve economic or rights performance.