Institutional Nesting: Lessons and Prospects

Vinod K. Aggarwal

Institutional Designs for a Complex World: Bargaining, Linkages, and Nesting, 1998

The tension between globalism, regionalism, and sectoralism has continued to challenge both policymakers and analysts. Can these different modes of organization in the world system be reconciled with each other? Is there an inevitable conflict between global arrangements on the one hand, and regional or sectoral regional arrangements on the other hand? This volume has sought to examine these questions by developing the notion of an institutional bargaining game and examining how such games might evolve through actors’ institutional strategies.

Existing approaches to examine the development of international institutions have contributed much to our understanding of institutional change. The three schools reviewed in Chapter 1 — neorealist institutionalism, neoliberal institutionalism, and the cognitive approach — each provides us with a different analytical lens on the problem of understanding institutional changes. In brief summary, the neorealist institutional approach emphasizes the role of power and control in influencing the rise and fall of international institutions. The neoliberal institutionalist school focuses on transaction costs and the importance of existing institutions in constraining and motivating the development of new institutions. And the cognitive approach emphasizes the role of scientific consensus and interaction of “epistemic communities” with interest groups in affecting the course of institutional development. But as I suggested, the leading contenders do not adequately capture important aspects of the phenomena of institutional evolution. In particular, standard analytic approaches do not adequately address the problem of how actors attempt to nest or develop parallel institutions as they engage in the modification of existing or innovation of new institutions.

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