Economic Diplomacy--Basics
Kishan S Rana
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1. Key Drivers
A. MFA not exclusive, even primary, contact channel -must coordinate other agencies, sub-state entities
B. Non-state actors, T2 & T3 growing, have to be coopted; may be unpalatable
C. Issues have multiplied, intertwined
D. Networking with own + foreign companies,
chambers, thinktanks, academia vital for eco dip
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1. Continued
E. Heads are hyper-active, huge growth in summits,
direct diplomacy, ‘illusion of familiarity’; role of
MFAs has grown
F. Commodification of information, velocity of change
G. Good governance, ‘value diplomacy’ pose
challenges (NEPAD in Africa)
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1. Continued
H. G. Impact of ICT, makes possible MFA- embassy
integration, new concept
I. Wider spectrum of representation within embassy
abroad, ‘CEO amb’ concept; management
challenges
J. MFA and eco ministries need to work together, for
best external projection
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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 (USChina, but in South Asia ?)
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3. Who Handles Economic Work?
• UNIFIED – Australia,
Canada, Sweden.
• PART-UNIFIED –UK,
Japan (only for aid).
• THIRD AGENCY –
Singapore.
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• COMPETITION – India,
Mexico, Thailand.
• MFA ABDICATION –
China, Germany.
There are other
variations.
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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
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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
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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
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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
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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
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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.
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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
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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
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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
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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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