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