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Economic Diplomacy--Basics

Economic Diplomacy--Basics. Kishan S Rana. 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

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Economic Diplomacy--Basics

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  1. Rana/2009 Economic Diplomacy--Basics Kishan S Rana

  2. 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

  3. 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?

  4. 2. Key Ingredients • Beyond govt ministries, it is business units, financial sector, chambers, thinktanks that must be harnessed. PPP works best. • MFA & eco agencies need harmonization; combined ministries, or joint operations. • Export promotion + FDI mobilization are top tasks; specialized agencies + optimal use of embassies.

  5. 2.Contd. • Regulatory framework is responsibility of govt – managing FTAs, regional accords, NTBs, anti-dumping; harmonization among agencies vital. • Tasks at home, and at embassies, are different; MFA network has vital role. • Well resourced, motivated, & trained dip mechanism delivers value

  6. 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.

  7. 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

  8. 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.

  9. 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

  10. 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

  11. 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

  12. 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

  13. 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

  14. Rana/2009 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

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