Would You Call Your Friend To Let Them Know You Will Be Late for Dinner?

By Anniek Barnhoorn

You and your friend made dinner reservations for tonight in Amsterdam, but because you were studying all day, you lost track of time and will now be an hour late. Would you call your friend to let them know you will be late for dinner?  

The majority of you would most likely call your friend as it is seen as a sign of politeness and respect. Nor would you want your friend to be waiting for you at the restaurant for an hour wondering if you stood them up. But what if you would not call? There are a host of reasons for this, but that is not what is important in this case. What is important is the consequence of not calling, as there would be social implications from your behaviour. Perhaps resulting in your friend leaving the restaurant after half an hour and cancel on tonight’s plans, or waiting in the restaurant and then giving you a long lecture during dinner ruining the mood. Because of social norms and in anticipation of the implications, it is best to call your friend to let them know you will be late. 

Hence, because your decision is guided by social norms of behaviour and is not a formally written rule, it illustrates an informal institution. Helmke and Levitsky (2004) define informal institutions as socially shared rules, usually unwritten, that are created, communicated, and enforced outside of officially sanctioned channels. They then clarify that informal institutions are not weak institutions, informal behavioral regularities, informal organizations, nor culture.

We are confronted with informal institutions every day, whether on the street, on public transportation or in elevators. These institutions are however not the same for everyone so should not be generalized, as they vary amongst countries and cultures as well as groups and societies. 

The World Trade Organization and Path Dependency

By Anniek Barnhoorn

Everyday life revolves around change, whether environmental, social, economical or political. Within each of these categories, institutions play a crucial role. Whilst each is intrinsically different, institutions change throughout temporal dimensions. One of the challenges associated with institutional change is path dependency, a phenomenon that enforces the direction of a certain path, thereby often making institutions difficult to change.

This phenomenon can be seen in the World Trade Organization (WTO). Set up in 1995 the WTO is the only global international organization dealing with the rules of trade between nations. The WTO is suffering from a steady erosion of its centricity, which will sooner or later bring the world to a tipping point. This controversy is in a large part the result of the 2001 Doha trade negotiations that were never completed. This had a negative path dependent effect from which the WTO was never able to fully recover. In addition, global politics and trade governance changed as international commerce started following supply-chain trade. Thereby making traditional trade no longer applicable to the WTO’s current framework.

Thus, since the WTO cannot recover from its flaws, nor keep up with the need for new rules governing the intertwining of trade, investment, intellectual property, and service, scholars are suggesting a WTO 2.0, a new WTO adapted towards supply-chain trade. Despite having numerous advantages, this solution also has many disadvantages, for example defeating the WTO’s biggest success, the dispute settlement mechanism. Therefore, this case study exemplifies that path dependency is difficult to reverse and that history is of great importance. Finally, despite being tied to path dependency, the world’s most important trading partners should address and adapt the WTO’s norms, thereby making way for the continuously developing new global trade regime.