The structure of federalism significantly influences policy development by distributing power across multiple levels of government. This decentralization allows for tailored policies that reflect local needs while providing opportunities for innovation. However, federal systems can also create challenges in coordination and conflicting regulations between state and national levels. The interplay among different government layers encourages participation from a diverse range of stakeholders, facilitating a more participatory approach to policy-making. Thus, federalism can enhance responsiveness and adaptability in governance.