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Argentina is by its constitution a federal republic, but in reality it has been developed as an excessively centralized political system. However, since 1983 there has been democratization in which partisan competition and elections have been reorganized around subregional governments and political actors. In this paper I argue that the federal system and the decentralization policy are the principal causes of the recent denationalization of the competitive structure of political parties in Argentina. The federal electoral system which produces a legislative problem of malapportionment and overrepresentation, as well as the federal revenue sharing system which grants a favorable transfer of fiscal resources to poor provinces, together account for the increased subregional political strength. The decentralization policy in the era of the 1990's was carried out in order to reduce deficits, but in fact it contributed more to increasing provincial political significance rather than achieving economic effectiveness. The fiscal federalism with its emphasis on economic efficiency and the federal electoral system with its emphasis on political equity imperatives have together become the two main factors that limit Argentine political development without achieving political autonomy and economic independence. [ABSTRACT FROM AUTHOR]