Let’s be friends not foes: an assessment of the strategic co-evolution of the World Bank and the AIIB in the face of institutional overlap

The World Bank and the Asian Infrastructure Investment Bank (AIIB) were widely seen as potential rivals in the global lending regime. The threat of institutional overlap and competition was expected to cast a shadow on the direction that their relationship would take. Today, however, the two institutions appear as partners, often complementing one another not only on specific technical aspects of projects but also effectively co-evolving cooperatively. This chapter investigates the factors that led to this puzzling outcome through an analysis of the World Bank and AIIB’s strategic reaction to the threat of institutional overlap. As the chapter shows, the two institutions recognized the advantages offered by cooperative relations and institutional isomorphism to cope with the potential negative effects of institutional overlap. This has allowed the World Bank to upkeep its status as the premier lending institution while the AIIB has benefited from the Bank’s well-established project pipeline and expertise.