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Economic Diplomacy--Basics

Economic Diplomacy--Basics. Kishan S Rana. 1. Key Drivers. MFA not exclusive, even primary, contact channel -- must coordinate other agencies, sub-state entities Non-state actors, T2 & T3 growing, have to be co-opted; may be unpalatable Issues have multiplied, intertwined

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Economic Diplomacy--Basics

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

  2. Rana/2009 1. Key Drivers • MFA not exclusive, even primary, contact channel -- must coordinate other agencies, sub-state entities • Non-state actors, T2 & T3 growing, have to be co-opted; may be unpalatable • Issues have multiplied, intertwined • Networking with own + foreign companies, chambers, thinktanks, academia vital for eco dip

  3. Rana/2009 1. Continued • Heads are hyper-active, huge growth in summits, direct diplomacy, ‘illusion of familiarity’; role of MFAs has grown • Commodification of information, velocity of change • Good governance, ‘value diplomacy’ pose challenges (NEPAD in Africa)

  4. Rana/2009 1. Continued • G. Impact of ICT, makes possible MFA- embassy integration, new concept • Wider spectrum of representation within embassy abroad, ‘CEO amb’ concept; management challenges • MFA and eco ministries need to work together, for best external projection

  5. Rana/2009 2. Role of Economics • It lies at the center of diplomacy. This was always true in the historical past (e.g the Amarna archives of Middle Egypt 1460-1220 BC) • Does flag follow trade (as with East India Co)? Often. Flag & trade are inter-twined • Today economics often determines politics (US-China, but in South Asia ?)

  6. Rana/2009 3. Who Handles Economic Work? • UNIFIED – Australia, Canada, Sweden. • PART-UNIFIED –UK, Japan (only for aid). • THIRD AGENCY – Singapore. • COMPETITION – India, Mexico, Thailand. • MFA ABDICATION – China, Germany. There are other variations.

  7. Rana/2009 3. (Cont) Stages Progressive stages, exist concurrently • Salesmanship: Pushing exports, attracting FDI, focus on market entry, brand credibility, self-introduction • Networking: Building local connections, links between counterpart agencies, public diplomacy, broad outreach • Regulation: Negotiating accords on DTA, investment protection, trade preferences, FTAs & RTAs; enforcement

  8. Rana/2009 3. (Cont) • Advancement of national economic interest is at core of external relations • Turf battles leave only losers • Winners practice ‘whole of government’ methods, with unified policy direction • Embassies abroad are essential action tools • High opportunity cost of embassy under-use

  9. Rana/2009 4. Country Promotion & Image • Need to show country brand in ‘powerful, attractive and differentiated way’; but must be rooted in reality • Image affects all aspects of external dip • Many pursue branding and re-branding • Many examples, results not always clear

  10. Rana/2009 4. Continued • ‘Brand audit’ establishes base line, need honesty, objectivity • Public-private partnerships work best, both in home and target country • Using local partners adds to credibility • Should guard against over-marketing

  11. Rana/2009 4. Continued • ‘India Brand Equity Fund’ is innovative PPP device -- in comparison with other countries • Perhaps need review to optimize it further • Some integration with tourism marketing also worthwhile • Media have produced innovative models of their own; should be encouraged

  12. Rana/2009 5. Promotion Methods • Assess real situation, objectively. • Using both wide catchment creation and pursuit of specific targets. • Using locals + “success stories”. • Outreach, integrating all diplomatic sectors, from culture to consular services + other agencies + diaspora. • Mobilize regional approach.

  13. Rana/2009 6. FTAs • Asia-Pacific: total of 77 FTAs signed, 65 under negotiation, at bilateral level • All FTAs involve some pain; key issue is net gain, seen in dynamic manner • FTA negotiations hinge on preparation, anticipation of partner’s perspective, interests • Harvard Negotiation method

  14. Rana/2009 6. Continued • South Asia is the world’s least integrated region • Analyze Sri Lanka + other FTA lessons • Take long view of national interests, moving beyond today’s concerns • Painless FTAs do not exist • Need integrated view of our objectives in target markets

  15. Rana/2009 7. Role of Innovation • Comment by one scholar: “Diplomacy is about nothing other than innovation.” • Examples: -- ‘Team Canada’ initiatives, using PPP models. --Indo-British Partnership: focused, self-financed counterpart programs. -- Singapore’s EDB; India’s ‘Team 9’ in Africa. • Integrate eco dip into total diplomacy

  16. Rana/2009 8. Conclusion • Target-setting through consultation, pursuing unified strategy • Building promotional networks, at home and abroad • Sustaining ‘whole of government’ approach • Better utilization of embassy networks • Vision, holistic actions, sustained pursuit

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