Economic Diplomacy-- Basics Kishan S Rana Rana/2009
Jan 05, 2016
Economic Diplomacy--Basics
Kishan S Rana
Rana/2009
1. Context
• Eco Dip is process through which countries advance external economic interest
• Key elements: trade, investments, aid, tourism• Issues have multiplied, are intertwined; non-
state actors co-opted in T/2 and T/3 process• Most states scramble for right mix of
structure, policy and method, to take proactive advantage of globalization
1. Contd.
• Globalization accelerates interdependence, but response of developing world uneven; few at forefront, others stagnate
• Eco Dip is expression of governance: hinges on vision, efficacy, organization and motivation of multiple actors
• 1976 Lomé Convention’s textile preferences: why did Mauritius succeed?
2. Key Ingredients
A. Beyond govt ministries, it is business units, financial sector, chambers, thinktanks that must be harnessed. PPP works best.
B. MFA & eco agencies need harmonization; combined ministries, or joint operations.
C. Export promotion + FDI mobilization are top tasks; specialized agencies + optimal use of embassies.
2.Contd.
D. Regulatory framework is responsibility of govt – managing FTAs, regional accords, NTBs, anti-dumping; harmonization among agencies vital.
E. Tasks at home, and at embassies, are different; MFA network has vital role.
F. Well resourced, motivated, & trained dip mechanism delivers value
3. Stages of Eco Dip
• FIRST: Salesmanship: main focus on exports of products and projects, consultancy services, manpower, expertise. Aid management is also major task.
• SECOND: Networking + Advocacy: using home & external partners to widen reach, build mutually beneficial connections. Home institutions in learning phase.
3.Contd.
• THIRD: Regulatory Management: negotiation of bilateral and other FTAs, regional diplomacy, use of WTO and other agencies, image building; domestic management of group interests & ‘whole of govt’ approaches.
All phases overlap; moving to higher one still demands work on the earlier stages
5. Good Eco Dip Management
• Decision process more open & plural; official agencies have service role; in & out placement of officials.
• Trade policy formulation brings in non-state actors, benefits from their advice; take NGOs + others to multilateral conferences & bilat negotiation.
• Capacity building, esp. training of officials.
5. Contd.
• Regional diplomacy: variations, such as ‘growth clusters’ practiced by ASEAN, China; innovative groupings such as IBSA, BRICs; needs joint work by MFAs & eco ministries.
• Sub-state actors, such as provinces, cities, play their own international role
• Direct diplomacy by heads of govt focuses on economics, business delegation
6. Country Brand
• Countries now seen as brands, driven by image
• Country brand needs presentation in ‘powerful, attractive and differentiated way’; but ‘rooted in reality’
• Image affects all aspects of external dip• Countries seek branding and re-branding• Complex art, results not always clear
6. Contd.
• Brand audit’ establishes base line, needs honesty, objectivity
• Must involve all stake-holders, brand needs wide ‘ownership’ + support
• Public-private partnerships work best, to produce united, goal-oriented action
• Should guard against over-marketing
7. Eco Dip in Field
• Embassies act as agents serving home business & economic actors
• Special export focus on new products, unexploited markets and niches
• FDI promotion via innovative actions, smart ‘selling’ of home destination
• Eco growth and integration produces reverse flow of FDI, indirect role of embassies
7. Contd.
• Eco dip integrates with political + other forms of diplomacy, including culture, education, media, S&T, and public diplomacy
• Emb acts as best information source on the target country, with ability to give holistic advice, suggest trade-offs and leverage
• Entire emb team should be devoted, in direct or indirect manner, with eco promotion
8. Promotion Methods
• Assess real situation, objectively.• Use both wide catchment generation + pursuit
of identified targets.• Use locals & their “success stories”.• Outreach is central; involve all diplomatic
sectors, from culture to consular services + available agencies + diaspora.
• Develop regional approach, e.g. in dip corps
Rana/2009