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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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1 context
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
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
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.
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
3 stages of eco dip
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
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
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
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
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
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
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
Rana/20098. 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