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This chapter describes how the institutional design of new democracies affect their political evolution. By institutions, it refers to formal political institutions, including political parties, electoral systems, and state design (namely federal versus unitary states). In addition to the decision to create a federal versus a unitary state, some scholars and policymakers have advocated for a consociational approach to democracy in countries that feature significant ethnic, religious or other cleavages. Consociational democracy is essentially a democracy that allows for significant power sharing—or the ability to access positions of power—among the country's various factions. Ultimately, institutions can play a particularly critical role in the consolidation and sustainment of democracy because they structure and constrain political behaviour. The chapter then considers the relationship between institutions and democratization.